NAB joins ANZ and CBA in higher interest rates for investors

Jonathan ChancellorJuly 27, 20150 min read

The National Australia Bank will be raising variable mortgage rates on interest-only loans by 29 basis points.

NAB follows rivals ANZ and Commonwealth Bank of Australia in raising variable rates on loans for property bought for investment purposes by 27 basis points last week.

It will also apply to owner occupiers with interest only loans with NAB's rate increase adding about $70 to the monthly cost of a $300,000 interest-only mortgage.

Sources told Fairfax Media that NAB is constrained from charging different rates to investors and owner-occupiers because of technical problems. 

NAB advised that interest only loans are the predominate structure for investors, and over the last three years housing investment loans had grown 34 per cent, while the number of interest only loans has risen 44 per cent.

The Australian Prudential Regulatory Authority (APRA) has asked banks to keep annual growth in investment home loans to below 10 percent in an attempt to cool red-hot property prices in Sydney and Melbourne.

NAB's interest-only rate changes will be effective August 10 for all new loans, while the change for existing interest only variable rate loans effective September 10.

Matt Comyn, group executive for CBA retail banking services says increasing rates was unavoidable to ensure the major bank remains within APRA’s 10% growth guideline. 

“As Australia’s largest home lender, we support the prudential regulator’s actions to ensure lending practices remain sustainable and we have been actively managing our investment home loan portfolio to remain below the 10% growth limit," he said.

Matt Comryn says the new investment home loan variable rate of 5.72% was still 0.18% lower than the rate six months ago. 

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.
This website uses cookies to ensure you get the best experience on our website. Find out more in our privacy policy.
Accept Cookies