NAB hikes rates for owner-occupiers, property investors

NAB hikes rates for owner-occupiers, property investors
NAB hikes rates for owner-occupiers, property investors

The NAB will increase its standard variable rate for owner-occupiers and investor property loans.

The standard variable rate for owner-occupiers will increase from 5.25 percent to 5.32 percent.

Investor property loans will increase from 5.5 percent to 5.80 percent. 

The standard variable rate increase may add an extra $13 a month on a $300,000 principal and interest mortgage.

The increase came after the US Federal Reserve increased its key interest rate.

Prime Minister Malcolm Turnbull told Network Seven the increase by NAB is certainly not welcome.

"But as you know, the banks obviously have to manage their own affairs, and they have funding costs," he said.

In the NAB's March Global & Australian Economic Perspective report, group chief economist Alan Oster noted the RBA is becoming increasingly focused on financial stability considerations, particularly household balance sheets in the context of a re-acceleration in house price growth in Sydney and Melbourne amidst elevated levels of household debt. 

"Recent comments from RBA officials raise the possibility that macro-prudential measures may be stepped up and we now consider a further rate cut as unlikely in this environment," he said.

"We have removed our expectation of a 25bp rate cut in late 2017, although continue to flag the risk of further monetary policy easing at some point given our concerns about economic growth and the labour market in 2018.

"As a result of our RBA view change, we are revising up our 2018 AUD/USD forecast slightly while maintaining our 0.70 end-2017 projection. A weaker AUD is still likely on a combination of further US interest rate-driven US dollar strength, lower commodity prices and potentially some deterioration in risk sentiment from current elevated levels. 

"Dwelling investment increased 1.2 percent in Q4, although that only partly unwound the Q3 decline – a subdued result given the anticipated rebound from temporary weather-related disruptions and the record level of construction projects in the pipeline.

"There are, however, signs that the contribution of dwelling investment to economic growth may soon peak.

"New medium-density approvals have come off sharply from their highs, although they are still at elevated levels (especially in Victoria). Meanwhile, housing markets in Sydney and Melbourne continue to defy belief in 2017, with property prices showing no signs of slowing despite tightening credit conditions and concerns about affordability."

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Interest Rates Nab

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