Westpac follows NAB in raising home loan interest rates
Westpac has raised its home loan interest rates, soon after NAB announced similar hikes, with both banks citing increasing funding costs.
But the banks are also reacting to heightened regulatory concerns as to the pace of lending.
Today ASIC chairman Greg Medcraft said he had "been saying for a while that I thought it was a bubble and other people are catching up now."
"Its Sydney and Melbourne [where prices are rising] so I think macroprudential are useful tools."
He said there were two aspects to macroprudential policies - the "prudential" aspect which impacts capital and the "conduct" aspect which regulated responsible lending.
The country’s second-largest bank said variable home loan rate for owner occupiers will increase by 0.03 percent to 5.32 percent per annum for customers with principal and interest repayments.
For owner occupiers on a variable home loan rate and interest-only repayments, there is a 0.08 percent increase to 5.49 percent per annum. The new rates come into effect on March 24.
For investors, the increases are higher with variable loan rate rising by 0.23 percent to 5.79 percent per annum for principal and interest repayments, while for interest only repayments, the increase is 0.28 percent to 5.96 percent per annum.
The rate hike was because of a economic and regulatory factors, said George Frazis, chief executive of Westpac Consumer Bank.
“Today’s changes are in response to increasing funding costs. Despite home loan interest rates being at historically low levels, both deposits and wholesale funding of mortgages have increased over the last nine months,” he said.
“We understand the significance of interest rate changes to our home loan customers, so we take a very careful approach to these decisions.”
Customers with interest only home loans who wish to move to principal and interest repayments can do so without paying a switching fee until 17 June 17, 2017.
Variable lending products for small businesses will also increase by 0.08 percent from April 3, the bank said.
Late last week, National Australia Bank lifted home loan rates by as much as a quarter of a percentage point, citing rising funding costs and increased regulation.
NAB raised its rates for owner-occupiers from 5.25 percent to 5.32 percent while for investors, it is now 5.8 percent from 5.55 percent previously.
