I recently took out a P&I variable home loan on a PPOR, with settlement next month. I have just been notified that my interest rate will be going up by 0.25%; however, the advertised rate on the website is still showing the lower rate I had signed up for.
Is it typical for this to happen, or should I try and get it lowered?
I have just been notified that my interest rate will be going up by 0.25%; however, the advertised rate on the website is still showing the lower rate I had signed up for.
I'm sure you had a date from when the rate rise would happen. When that date comes around the website should update as well.
If not, you can ring up and have a chat with someone to see what they can offer.
Date was today, hence asking now!
Surprised it hasn't been updated then. Give it a day or two and see what happens, but as your loan hasn't started yet, no point in stressing about it. You'll most likely have another 0.25% rise before settlement based on what they are saying.
Fair enough - totally prepared for rate rises, just didn't want to be unnecessarily dogged before day 1.
@sclass: I work at a big 4 so will give context.
When you sign a contract with a bank for a home loan, the only pricing item you contractually agree upon relates to the discount margin that they will be offering you on that product's index rate (e.g. 2.50%). That discount margin will remain fixed (outside of negotiations or changes in LVR) and is what is used to dictate pricing. When rates go up, the index rate goes up (it will be updated on the site in due course) and your rate goes up respectively.
The index rate is the same for all customers for each product, so customer discrimination is done solely on discount margins alone.
The same goes for fixed rates (albeit at a much lower margin, and with a discount margin that expires much sooner), with the exception that fixed contracts allow you lock in a rate prior to settlement for a $500-$1000 fee. Unfortunately, variable loans have no facility to 'lock-in' rates so movements in index rates will flow through to your rate regardless of settlement date.
Based on what who is saying?
The market is giving a 10% chance of a December rate rise as of 23 November and an 18 month implied yield high of only 0.14% higher than the current rates.
Based on what who is saying?
Something something about haircuts and demand….
There will be more rises!
rate rises can happen and will affect your interests rates up until settlement date, the other option is to choose a rate lock usually cost 1% of home loan
My error yes 0.1% as per post below
Variable rates are subject to increases, they will usually go up with each RBA increases and there was a 0.25% increase earlier this month. Expect further increases as the RBA continues to increase rates to control inflation.
The rate lock option is only if opted for a fixed rate loan and even then the rate can change all the way up to settlement day unless you paynthe rate lock fee which is different for each bank (eg. NAB is 0.15% loan amount, CBA/ANZ is $750, Westpac is 0.1% of the loan)
You're free to vote with your feet if they're giving you a raw deal. This is what brokers work for.
there will be another increase in december, jan and feb
Your rate will be in your loan contracts not on the website as advertised.
Buried in your mortgage terms is something like “x.xx% off standard variable rates”, so you sign up to that, not the actual rate.
Yes it's typical (it will be written into the loan contract you signed). You can negotiate all you like but there's no guarantee of the outcome.