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Update for CUA members with a variable rate investor loan

 
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CUA is making some changes to our variable mortgage interest rates for residential investors.1

Interest rates will increase by between 0.17% p.a. and 0.19% p.a. across most CUA variable investor loans. Higher rate increases between 0.52% and 0.54% will apply to Interest Only lending on selected variable products. The new interest rates are effective Thursday 16 November 2017.

CUA members with a variable rate investor home loan will receive a letter in the coming days to confirm the new interest rate for their loan and the revised minimum repayment amount.

For most members making Principal and Interest (P&I) repayments, the new minimum P&I repayment amount will apply from the next repayment due after 18 December 2017. For members with Interest Only or Construction loans, the new minimum Interest Only repayment amount2 will apply from their next repayment due date on 1 December 2017.

CUA considers a range of factors when reviewing interest rates, to balance the needs of our members and ensure that we are positioned to continue to grow in a sustainable way.

CUA last reviewed variable investor interest rates in March 2017. There has been significant change in market pricing of investor loans in this period and these rate changes will realign our most popular variable investor products to market rates.

The changes also introduce differentiated interest rates for Interest Only lending on CUA’s popular Kick Start Variable, Fresh Start Basic and Fresh Start Variable investor home loans. Interest Only lending for investors on these three products will now be priced 0.35% p.a. higher than for borrowers repaying Principal & Interest.

Lower interest rates for variable P&I investor lending will help encourage borrowers to consider this repayment option. Members will benefit from a lower rate and by paying down the loan, each repayment is helping them move closer to owning their property outright.

To assist impacted members, CUA is waiving the switch fee for our investor members wanting to switch from Interest Only repayments to Principal and Interest. We also offer a range of competitively priced Fixed Rate home loans for members considering fixing their rate.

The changes to investor rates, and introduction of Interest Only pricing for selected products, help position CUA for a future phased return to variable rate investor lending, which will expand choice for investor borrowers.

CUA variable investor lending has been closed to new applicants since the end of March to allow us to manage our investor lending within relevant limits. We began a phased return to investor lending in July, but to date, new investor lending has been restricted to fixed rates. This has meant CUA has not been able to support members wanting to take out a new variable rate investor loan.

These latest rate changes will enable CUA to responsibly manage our investor lending growth and interest-only lending flow within relevant limits, when CUA resumes accepting variable investor loan applications on selected products.

Table: CUA Investor Home Loans – rate changes, effective Thursday 16 November 2017

Variable rate investor loans

Loan type

Current interest rate (p.a.)

Increase (p.a.)

New interest rate (p.a.)

Comparison rate (p.a.) 3

Fresh Start Variable

P&I

4.74%

0.17%

4.91%

4.92%

Construction

4.74%

0.17%

4.91%

4.92%

Interest Only

4.74%

0.52%

5.26%

5.07%

Fresh Start Basic

P&I

4.66%

0.17%

4.83%

4.88%

Construction

4.66%

0.17%

4.83%

4.88%

Interest Only

4.66%

0.52%

5.18%

5.03%

Kick Start 2-Year Introductory Variable

P&I

3.96%

0.19%

4.15%

4.76%

Construction

3.96%

0.19%

4.15%

4.76%

Interest Only

3.96%

0.54%

4.50%

4.82%

Standard Variable

5.37%

0.17%

5.54%

5.59%

Discount Variable (inclusive of 0.20% p.a. loyalty discount)

5.17%

0.17%

5.34%

5.45%

Fresh Start Access

4.79%

0.17%

4.96%

4.97%


1. Home loans issued by Credit Union Australia Ltd ABN 44 087 650 959, Australian credit licence 238317 to approved applicants only. Lending criteria, fees, charges, terms & conditions apply. Ask us for details.

2. For members with Interest Only lending, the minimum Interest Only repayment amount is the estimated monthly repayment based on the total loan amount outstanding and a 31-day month. However, the actual monthly repayment amount will be the amount of interest accrued each day for that specific month.

3. Comparison rate calculated on a $150,000 secured loan over a term of 25 years based on monthly repayments. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

Feb 26, 2019 | Found in: news, mediarelease,
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