Just want to let you all know that Mebank has just dropped their 3 years fixed rate home loan to 3.99% (comparison rate 4.84%).
This product also allows you to pay an extra $30k per period. :)
ACL 392625
Me Bank 3 Years Fixed Rate Home Loan - 3.99% (Comparison 4.84%)
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Is this just fantasy?
is it bold?
@clarky: It's been a long day without you my friend
And I'll tell you all about it when I see you again… oh wait…
Comparison rate a Little High, fixed rate a Little Low
- Member Package annual fee of $395 applies.
yeh wtf m8 put the package fee in details too plz
A bit misleading to show a picture of $0 - Save on Fees: Zero application fee. Zero account-keeping fee.
package fee is for anyone who takes on the professional package only.
If you simply take out the standard 3 years fixed loan, there's no annual fee.
Find out here
yeh but then… is the rate still 3,99%?
But according to the table there are "upfront fees" if you don't pay the "package fee"…
@Matt P:The comparison rate is only applicable to a very specific situation which isn't likely to be the same as what you are applying for.
@Matt P: Comparison rates can be a handy reference point, but you should endeavour to get to know all aspects of your loan/s. E.g One reason that the comparison rate is higher than the fixed rate here is because the loan will default to the standard variable rate (currently 5.13%) after the expiry of the fixed rate period. A shrewd OzBargainer may shop around or re-fix the loan after the expiry of the first fixed rate period, thus never pay the (presently) higher variable rate.
Got excited, thought it was fixed deposit
They were good years ago when they were a superannuation credit union, got taken over by Perpetual & failed pass on many interest rate cuts.
Look how high the variable rate is.
They were never taken over by Perpetual, they are owned by the industry super funds: http://en.wikipedia.org/wiki/ME_Bank
Wrong they were taken over. In the GFC many small lenders were taken over by the larger, the government only backed the large banks:(
Perpetual means Perpetual Limited under the Superannuation Members Home Loan Program.
Superannuation Members Home Loan Program is now called ME bank.
Correct me if I'm wrong.
Borat - You are incorrect.
SMHL (Super Members Home Loans) was created by National Mutual in 1994 to provide home loans to Australian Workers. The bank was renamed to Members Equity Bank in 1999 and received their banking licence from Australian Prudential Regulation Authority in July 2001.
Perpetual was (and still is) the trustee of the ME Bank Securitisation Programme which is also called "Superannuation Members' Home Loans (SMHL)".
Perpetual are trustees of just about every Bank securitisation programme in Australia and did not, and has never, taken over ME or any other Bank.
As Exidy points out. ME is owned by industry super funds.
You're wrong on both counts. ME was never taken over, Perpetual's role as securitization partner with ME Bank predates the GFC by many years. And the government did not back only the "large banks", the guarantee scheme applied to all ADIs (holders of a banking license) both large and small. See http://www.guaranteescheme.gov.au/. That includes ME Bank.
Many non-bank lenders did cease operations or consolidated or were taken over, e.g. RAMS. But they were never guaranteed by the government, before or after the GFC. However, there were no changes to ME Bank's ownership structure during this time, they were and remain owned by the 30 industry super funds.
Why is the comparison rate so high? As stated above there is a Member Package annual fee. There are also other fees but I struggle to see how the comparison rate is so high. I'm with loans.com.au and my interest rate is 4.27%. I'm pretty sure the comparison rate is very close to that.
because they calculate it over 25 years so first 3 years at 3.99% and then the next 22years at their variable rate.
so I assume the variable is highwith your current variable laons.com.au, they use that advertised variable rate to calculate the whole 25 years. so the comparison rate would be close (variance being the misc fees)
just learn what "comparison rate" actually means and you'll figure out why.
i hope im right… coz this is just my uneducated guess
Thanks, I never really looked into comparison rates, and have generally stayed away from lenders who have a lot of fees or there is a big difference in their advertised rates to the comparison rate. I may have missed out on a 'better' deal on the way but I think I've done pretty good so far. I just checked their variable rate and it is 5.43%.
yeh, that's the way to go. it's not rocket science.
sounds like you really need to get yourself a mortgage broker..
at least have a chat to them… they dont cost you anything to talk
you're correct in that logic
comparison rates on fixed loans only work if you intend to never change/modify/switch the loan at the end of the fixed term, which is usually unwise as many default to variable rate loans which may not be the cheapest option
You need to calculate that there are extra fees in paying off the loan early (usually first 5 year), plus then there are fees to set up a different loan such as valuation fees and set up fees. Not saying don't keep changing lenders, but do some calculations first to see if it is worth it.
interest rates will fall sometime this year..does not make sense to go for fixed rates
yeh but then once they fall, the new fixed rates will go up / are you the interest rate oracle?
a bit of economic reading will point you in the right direction as to where the interest rates are going..
In September 2014, most economists were picking that rates would increase, some suggesting as early as Feb 2015 - . http://www.smh.com.au/business/the-economy/rates-are-on-hold…
In November 2014, economists were still predicting rate rises in 2015. http://www.smh.com.au/business/markets/anz-cuts-gdp-forecast…
By December 2014, some economists had changed their minds and decided that the RBA was going to cut rates. http://www.abc.net.au/news/2014-12-02/rates-set-to-equal-lon…
Early this year, the general consensus has been that rates would be cut.
Someone looking at a fixed rate loan in this period could have done a bunch of economic reading, taken out a fixed loan and gotten burned.
I wouldn't be listening to anyone who suggests that you can predict interest rate movements with certainty, especially over the course of 3 years.
Here's what the NAB said about interest rates today in their business conditions report:
We still see another rate cut – most likely May but it is possible that if the economy continues to improve, the cut could be further delayed. We are not forecasting a second cut to below 2% - we see that possibility at 35-40% - significantly below the market’s current view (fully priced). We see rate rises by late 2016.
Maybe you missed that bit of reading?
interest rates will fall sometime this year.
it won't be long before they are negative…
some people can't take a joke, jv. Pardon them :D
I wasn't joking…
http://www.wsj.com/articles/as-interest-benchmarks-go-negati…
"rates have put some lenders in an inconceivable position: paying interest to those who have borrowed money from them"
.
"Interest rates have been falling sharply, in some cases into negative territory"
@stockastics:: …and while you wait for interest rates to drop by…what, 0.25%pa, you'll be paying 1.14%pa more on their variable rate loan (or 0.84%pa more variable versus 1yr fixed). Interest rates would have to fall more than 5 times (assuming 0.25% reduction each time) over three years before you would start to make back the 'loss' associated with staying variable.
check the comparison rate and not the advertised rate (only 8bps difference for 1 year)..and there are better loans available elsewhere..
as they say, read the fine print before thrashing someoneIf you have a large loan the comparison rate will drop significantly.
The main reason the comparison rate for the variable rate is only 8 basis points more than the 1 year fixed rate is because the comparison rate is calculated over the (25 year) life of the loan! Thus it is based on (amongst other things) the premise that the lendee would be paying 4.29% for one year and then paying 5.13% (+/- some risk allocation) for 24 years.
While ever interest rates are low, the fixed rate should be lower than the variable rate. It's only once banks start to expect rates to rise that the fixed interest rates move above the variable rate. If the lendee re-fixes at the same low interest rate at the end of the fixed rate period, then they will never pay the (higher) variable rate and therefore not pay anywhere near the quoted comparison rate, either.
Disclosure: I'm a Mortgage Broker.
I’m happy if you guys go straight to ME bank for the deal.
But just to let you know I can get you this same deal and you’ll get a rebate of 0.06% of your loan value back. :)
Still waiting for mine….. :p
Thats like $240 on a 400K loan, from what I have seen from my current Bankwest Loan the trailing commissions are almost $2XXX right at start with trailing monthly commissions :D
See how Qwibble, cashrewards shares 80% of it what it gets , may be share at least 50% of the love :D
He also has a lot more work to do in applying for a loan, whereas Cashrewards just provide a link to a website…
lol @ 0.06%
loosen the purse strings a bit ;)
Hi Tom,
Can you please provide more info on how this can be done?
Cheers,
mish
I am tempted to neg this "deal" - better deals out there ie ubank have a slightly higher rate but the comparison rate (which matters) is lower, so overall you pay less. No deal here
personally i dont see it as a deal either. especially with the package fee.
yup, i might come out with 2.99% interest rate, and charge $8000 a year in fees..
I just compared the same product between Ubank and MEbank.
IF you refinance after 3 years, MEbank will be cheaper.
Take the Standard Fixed Loan with MEbank, 3.99% for 3 years. Pay an upfront $350. No ongoing fee.
Take the Standard Fixed Loan with Ubank, 4.13% for 3 years. Pay an upfront $395. No ongoing fee.MEbank site = + Member Package annual fee of $395 applies.
@trevorcheetah: Have a look at the standard home loan.
http://mebank.com.au/personal/home-loans/compare-home-loans/…fair point, wonder how they got to a 4.84% comparison rate then? doesnt add up
i wouldn't fix anything just yet… Has an offset account option but comparison rate is even higher at 5.2%.
Is this financial advice?
no that's just what he would do.
Haha, you know what I mean with the fixed rate home loan and speculation of the RBA lowering the cash rate.
Assuming that you would have the loan anyway, while you're hanging around waiting for a ~0.25% drop in interest rates, you're paying an extra 1.14% on your debt. Doesn't make any sense!!
Could someone please explain what a comparison rate is?
The Comparison Rate is an indicative interest rate that is designed to help members identify the 'true cost' of a loan. The Comparison Rate takes into account the interest rate and "ascertainable fees and charges" that relate to the loan, in an attempt to express some of the costs of a loan into a single (comparison) rate.
"Ascertainable fees and charges" are those that are definitely payable during the life of the loan - such as application fees, monthly or annual charges, cost of valuation and legal fees.
The Comparison Rate DOES NOT include fees and charges that may occur or are based on some future "event" - such as redraw, early termination fees, progress payments or fees charged by some institutions when you decide to switch lenders. In addition, government and statutory charges are not included - as these are standard irrespective of the type of loan or who the lender is.
So, whilst the Comparison Rate is a useful tool for comparing the cost of different loans, it should be remembered that it doesn't provide the total picture.
Source: http://www.fccs.com.au/ratesfees-loans-rates-what-is-a-compa…
Thanks gentlemen, makes sense now!
So I guess if the interest rate is low, and the comparison rate is pretty close to it, then it's a good deal.
Yes.
Ensure though if you're planning on breaking the loan after a fixed rate ends, you understand the break costs involved in doing so
the comparison rate is really irrelevant for fixed rates.
unless you plan to stick with mebank after the 3 year period.
simply compare the fixed rate and the year fees ($395) with other banks to get a comparison.
True, but the cost of moving to another bank is not just this annual $395. Don't the existing bank charge loan setup fee when you close the loan with them? I vaguely remember something like this, not 100% sure. Some one who know better can comment.
4.83% comparison rate is way too high
It's high because:
- The loan reverts to 5.13% after 3 years. Can always refinance then :)
- They use 150k as the indicative figure.
- They use 25 years as the indicative life of the loan.
The loan reverts to 5.13% after 3 years.
Wow, they can predict the interest rate in 3 years time !!! I'm impressed…
Lol you got me.
Because the current ongoing rate is 5.13%
I guess this is prediction. the rate will change according to market rate ?
Yes this is true. Don't forget, Other lenders have to abide by the same rules when stating their comparison rates. One needs to consider the likelihood of switching once the promotional rate ends. Some people are just too damn lazy to (i.e. me most of the time). If that is the case, they should go with a lender that offers a lower comparison rate.
Don't have to switch lenders, just switch products. Most (all?) lenders will send you a letter advising you that your fixed rate period is about to expire and ask you what you want to do. Usually you are presented with two cost-free options:
- Do not do anything and the loan will become whatever the standard variable rate product is (current 5.13%pa in this case); or
- Re-fix the loan for between 1-5 (or possibly 10) years at whatever fixed rates they're offering at the time.
If the variable and fixed rates are still positioned as they are now (i.e. fixed rates lower than variables rate) in three years time, then the lendee in this case could refix at < variable rate and therefore continue paying less than the comparison rate.
Personally, I've got a fixed rate loan that I'm just about to re-fix for the fourth time. The first time was when rates were going up and the fixed rate was higher than the variable rate, but my bank forced me to fix the loan due to marginal affordability (which annoyed me, because the variable rate was always lower than the fixed rate over the fixed rate period, even after the cash rate was increased 5 times!!). Each other time, the fixed rate has been lower than the variable rate both at the time of fixing and for the course of the fixed rate period. While ever the fixed rates on offer are lower than the variable rate I will probably continue to re-fix (noting that there can be other restrictions that may apply - such as you can usually only pre-pay up to a certain amount with a fixed loan where some lenders have no limit to how much you can pre-pay on a variable loan).
Agree - you can get a cheaper variable rate with no annual fee. Not too sure what bargain there is considering ubank is offering 4.29% (variable and comparison rate).
yea variable is way too high
I went bankwest today over this. Reason being limited to 30K in repayments and I use my offset account as a bank account.
how is this a deal? your comparison rates are higher than many of the other lenders?
Care to name those banks with lower comparison rate
Comparison rate is higher because by the end of the 3 years fix, it reverts to ME bank standard rate (currently at 5.13%).
If you're diligent enough to seek another deal before the fix rate expires then the current comparison rate becomes irrelevant.
Fees out of current loan, fees to leave the new ME loan, fees to join the new ME loan.
In the end you are better of not moving across.
Additional repayments is $30k over the 3 year period - not per year
sharp eye. Fixed. Thanks :)
Guys remember, the source of funding of fixed rate most likely from US funding, therefore if US start increasing their interest rate then the cost of funding will be increase as well, so don't be surprise the fixed rate might increase in the near future (I m guessing june or after when the FED start increasing their interest rate).
How about RBA cut their interest rate? It will weaken further the AUD, then Chinese buyer will see Australian property still cheaper compare than Beijing, Shanghai, HongKong and Singapore (most of them holding USD). Bringin AUD to 60 cents level, will push your property market even higher especially Sydney market. Don't worry about foreigner can't buy property in Australia, they can use proxy in here (relative, kids, associate, etc).
So it is the biggest bet of RBA, drop the interest rate to revive the economic or it will create more bubble to the property market.
Thats interesting, where are you getting your information from regarding the source of funding? I work for a bank and we have 0 of our funding sourced from the US as do many of the other banks i speak to on the phone on a daily basis.
which department are u working for?
which department are YOU working for?
jv on 14/04/2015 - 09:50 Comment score below threshold.
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