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You can find the current article at its original source at https://www.theguardian.com/australia-news/2016/dec/05/nab-and-westpac-increase-rates-on-investor-home-loans
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| NAB and Westpac increase rates on investor home loans | |
| (35 minutes later) | |
| National Australia Bank and Westpac have increased interest rates for borrowers as they seek to safeguard profit margins. | National Australia Bank and Westpac have increased interest rates for borrowers as they seek to safeguard profit margins. |
| Despite the Reserve Bank of Australia cutting the cash rate to the all-time low of 1.5% in August, NAB said on Monday it would increase its variable rates on new and existing residential investor home loans by 0.15% from 12 December. This means the bank’s rate for investors climbs to 5.55%. | Despite the Reserve Bank of Australia cutting the cash rate to the all-time low of 1.5% in August, NAB said on Monday it would increase its variable rates on new and existing residential investor home loans by 0.15% from 12 December. This means the bank’s rate for investors climbs to 5.55%. |
| Westpac will increase rates on its interest-only mortgages by 0.08% to 5.41%. Its rate for investors with interest-only products will rise by 0.08% to 5.68% while its equity access loan rate will rise by 0.15% to 5.80%. | Westpac will increase rates on its interest-only mortgages by 0.08% to 5.41%. Its rate for investors with interest-only products will rise by 0.08% to 5.68% while its equity access loan rate will rise by 0.15% to 5.80%. |
| Defending the increases, NAB’s chief operating officer, Antony Cahill, said the bank “did not make the changes lightly” but was forced to do so by the “increasingly challenging environment”. | Defending the increases, NAB’s chief operating officer, Antony Cahill, said the bank “did not make the changes lightly” but was forced to do so by the “increasingly challenging environment”. |
| “Net interest margins – the difference between what we pay to borrow funds to lend to our customers and what our customers pay – are down, particularly in home lending, and they remain under pressure,” he said. | “Net interest margins – the difference between what we pay to borrow funds to lend to our customers and what our customers pay – are down, particularly in home lending, and they remain under pressure,” he said. |
| “A low-rate environment poses considerable challenges to all lenders, and we must respond to what is happening in the economy and the market. In doing so, we have to consider a range of factors including the ongoing need to hold longer-term stable sources of funding, continued elevated funding costs, regulatory requirements and the competitive pressures at play.” | “A low-rate environment poses considerable challenges to all lenders, and we must respond to what is happening in the economy and the market. In doing so, we have to consider a range of factors including the ongoing need to hold longer-term stable sources of funding, continued elevated funding costs, regulatory requirements and the competitive pressures at play.” |
| Cost of debt is rising in oz. A 0.15% rise equals $1,200 for an $800k loanhttps://t.co/ax5xVX6xr4 | Cost of debt is rising in oz. A 0.15% rise equals $1,200 for an $800k loanhttps://t.co/ax5xVX6xr4 |
| “The pricing of interest-only home loans must reflect prudent lending practices in a dynamic and complex home loan market,” Westpac consumer bank chief executive George Frazis said. | “The pricing of interest-only home loans must reflect prudent lending practices in a dynamic and complex home loan market,” Westpac consumer bank chief executive George Frazis said. |
| Australia’s four big banks have long complained about rising funding costs and have pushed up rates for investors in the wake of a crackdown by regulators on the amount of money going into loans for housing investment. | Australia’s four big banks have long complained about rising funding costs and have pushed up rates for investors in the wake of a crackdown by regulators on the amount of money going into loans for housing investment. |
| When the RBA cut the cash rate to 1.5% in August, the Commonwealth Bank did not pass on the full cut to borrowers, with its chief executive, Ian Narev, arguing that it wanted to protect savers. | When the RBA cut the cash rate to 1.5% in August, the Commonwealth Bank did not pass on the full cut to borrowers, with its chief executive, Ian Narev, arguing that it wanted to protect savers. |
| The RBA board is expected to keep the cash rate on hold when it meets for its monthly policy meeting on Tuesday. | The RBA board is expected to keep the cash rate on hold when it meets for its monthly policy meeting on Tuesday. |
| JP Morgan’s chief economist, Sally Auld, said there was widespread consensus the rate would not change and Citi economists said weaker-than-expected economic data prints – including the official wage price index, capital expenditure and employment figures, as well as the weaker Australian dollar – would keep the RBA on the sidelines. | JP Morgan’s chief economist, Sally Auld, said there was widespread consensus the rate would not change and Citi economists said weaker-than-expected economic data prints – including the official wage price index, capital expenditure and employment figures, as well as the weaker Australian dollar – would keep the RBA on the sidelines. |
| The Citi economists’ note warned that a soft labour market into the new year could trigger another interest rate cut in the first half of 2017. | The Citi economists’ note warned that a soft labour market into the new year could trigger another interest rate cut in the first half of 2017. |
| But Monday’s moves by NAB and Westpac may reflect the views of some experts that banks’ wholesale borrowing costs are set to rise over the coming years as the current rate-cutting cycle comes to an end and Donald Trump’s US election victory ushers in a more inflationary era. | But Monday’s moves by NAB and Westpac may reflect the views of some experts that banks’ wholesale borrowing costs are set to rise over the coming years as the current rate-cutting cycle comes to an end and Donald Trump’s US election victory ushers in a more inflationary era. |
| The US Federal Reserve’s monetary policy committee is expected to increase rates at its meeting next week and the post-election spike in US bond yields also points to more rate rises as monetary policy tightens in 2017. | The US Federal Reserve’s monetary policy committee is expected to increase rates at its meeting next week and the post-election spike in US bond yields also points to more rate rises as monetary policy tightens in 2017. |