Suncorp increases variable interest rates

Suncorp have announced they will increase their variable interest rates which may affect your loan. Customers of Suncorp should soon receive notification directly from them. 

What has changed?

  • Variable Owner Occupied Principal & Interest rates will increase by 0.05% p.a.
  • Variable Investor Principal and Interest rates will increase by 0.08% p.a.
  • Variable Owner Occupied Interest Only rates will increase by 0.12% p.a.
  • Variable Small Business rates will increase by 0.15% p.a
  • Access Equity (Line of Credit) rates will increase by 0.25% p.a.

When will the rates change?

These changes will come into effect on Wednesday 28 March 2018.

Will my interest rate discount still apply?

Yes, if you’ve been given a discount on your interest rate, this will still apply to the loan. If you have a split loan with a portion on variable, the increase/decrease will only apply to the variable component. 

Should I change to P&I or fix my loan?

In our Property & Finance market update in February, we reported that interest rates will continue to be segmented and increases will impact some borrowers more than others.

Owner occupied properties, particularly borrowers on a principal and interest repayment structure are the golden children of borrowers. This lower risk group of borrowers will continue to be flavour of the month (and year), so if you are looking to purchasing a property, structuring the loan as owner occupied on P&I repayments will ensure you get the lowest interest rate. Where the strategy is appropriate, fixing some or all of your home loan can be a good option for this segment.

Since APRA and the government restricted the volume of interest-only lending, (popular with investors), each bank and second tier lender has been changing their rates to either encourage or discourage borrowers for banking with them. This lending segment is highly cyclical and will change from one day to the next. Depending on the timing and lender, it is still possible to secure a rate below 4% (just!) – however this will only be for strong investors with a large deposit, good rental returns and squeaky-clean credit history. Rates are likely to increase towards the end of the year.

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Why has Suncorp increased their variable interest rates?

Suncorp Banking & Wealth CEO David Carter said the decision to increase rates was based on increasing costs of funding, as well as meeting the costs associated with regulatory change.

“Funding costs have been steadily rising since the end of October. This has been driven by the outlook for US interest rates, as well as domestic factors,” Mr Carter said. “As a result, we have seen the key base cost of funding, being the three-month Bank Bill Swap Rate (BBSW), rise approximately 0.20%. This increase results in higher interest costs to our wholesale funding, as well as our retail funding portfolio, such as term deposits.

“Additionally, APRA released its consultation paper on capital levels for banks in February, which will require all banks to hold additional capital for all investment and interest-only loans.

You can read the full media release from Suncorp here.

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