All of the big four banks have announced changes to out-of-cycle interest rates in the last week, as lenders respond to pressure on funding costs and increasing investor appetite.
Commonwealth Bank was the last of the big four to announce changes to their interest rates. On Friday the ANZ had also announced that it would be increasing variable interest rates for investors as well. Meanwhile, NAB’s variable rate for residential investment home loans had also increased last week with much scrutiny from the media and political figureheads
Other lenders have also followed suit, with Macquarie bank and consequently non-bank lender Homeloans’ Macquarie funded product announcing that rates were increasing and with Bendigo Bank announcing a 25-basis point increase in its residential investment variable rate.
These moves follow a spate of increases to investment loans in recent weeks, as banks increase their interest rates for investors in a bid to remain under APRA‘s 10 per cent speed limit, respond to “increasing funding costs” and mitigate any potential risks in lending to investors.
According to the latest volume of JP Morgan’s Australian Mortgage Industry Report, new capital requirements under Basel 4 could see property investors hit by rake hikes of up to 3 per cent.
Increasing investor appetite has led some analysts, such as Morningstar’s David Ellis, to suggest that the prudential regulator could soon introduce additional macroprudential measures.
“Likely action, known as macroprudential controls, include the reduction in the current 10 per cent annual growth limit on residential lending to something around 5 to 7 per cent.”
Morningstar also warned that APRA could raise the minimum serviceability buffer “to 3 per cent from 2 per cent” and lift the risk-weighted capital floor for new residential investor borrowers holding multiple properties to 75-100 per cent.
All in all APRA has not finished fiddling with rules and affecting borrowers – with that in mind the option of fixing rates especially on investment loans is going to be more and more attractive
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