Blaming rising borrowing costs on wholesale funding, growing regulatory expenses, and APRA’s 10% speed limit on investment growth, a slew of smaller banks, building societies, and other lenders have followed the big leagues and increased their lending rates.

Others are increasing the size of deposits, increasing the size of loans on offer, or welcoming borrowers who’ve been deemed too high-risk by other lenders.

Lenders are also trying to make their fixed-rate offerings more attractive as borrowers switch from rapidly rising interest-only and standard variable rate loans.

Newcastle Permanent

The Newcastle-based building society has increased variable interest rates for principal-and-interest repayments by one basis point. Variable rates for credit facilities and interest-only offers are also up by two basis points.

“Although our home-loan interest rates are at near historic lows, the cost of funding our home loans has increased,” said Terry Millett, CEO of Newcastle Permanent.

Pepper Money

The specialist residential mortgage and consumer lender is trying to fill the gaps it believes are appearing in the mortgage market as more risk-adverse lenders turn away borrowers who’re deemed too risky.

Moving forward, applicants with unlimited defaults will be considered by Pepper as long as the defaults are linked to a specific credit event, such as job loss, illness, or divorce.

Pepper is also increasing the maximum loan size across loan-to-value ratios of 75%, from $1.25m to $1.75m, for full-documentation loans.

ME Bank

The Melbourne-based bank, which is owned by 29 industry funds, has followed CBA by increasing rates for one-, two-, and three-year fixed-term home loans by up to 15 basis points.

Like other smaller lenders, ME Bank has traditionally relied on complex securitised funding, even though it has been moving to a deposit-based model since the global financial crisis.

Auswide Bank

The Bundaberg-based diversified, listed financial services group is increasing minimum deposits to 10% of the amount borrowed for loans and refinances.

“We will no longer consider applications that exceed this loan-to-value restriction,” a spokesperson said.

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan