Westpac to raise home loan rates for all by 20 basis points in November

Westpac to raise home loan rates for all by 20 basis points in November
Westpac to raise home loan rates for all by 20 basis points in November

Westpac will raise its home lending rates by 20 basis points to help boost its capital reserves. 

The surprise move lifts mortgage rates on residential property by 20 basis points, for owner occupiers and property investors.

The new rates will take effect from November 20.

The country's second biggest bank will increase headline owner-occupier rates to 5.68%, and investor rates to 5.95%.

Chief executive Brian Hartzer said the capital raising places its capital ratio "within the top quartile of banks globally".

"Capital raised responds to changes in mortgage risk weights that will increase the amount of capital required to be held against mortgages by more than 50%, with the increased regulatory required to be applied from July 1, 2016," the bank statement said.

The increase in mortgage rates would also help meet the capital requirements, it said. 

UBS and Merrill Lynch are handling the capital raising for the bank. The changes apply only to Westpac-branded loans, not St George, Bank of Melbourne or BankSA.

The Australian Financial Review's Chanticleer columnist Tony Boyd wrote Westpac's decision to share the pain of higher capital charges with shareholders and home loan borrowers will "deliver a big jolt to the economy - and fend off a potential hedge fund attack."

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

Tags: 
Interest Rates Finance

Comments

Be the first one to comment on this article
What would you like to say about this project?