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Rates set to rise

Finance Markets / Latest Activity

Australia

Apr 15 2018

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While the Reserve Bank of Australia has indicated cash rates will remain stable, lenders are increasing property borrowing rates by up to 25 basis points, in response to rising funding pressures. 

Data shows that wholesale and regulatory costs have been rising for the past five months, and lenders are looking for ways to offset costs. 

The three-month bank bill swap rate has risen by about 22 basis points, resulting in higher interest costs for lenders' wholesale and retail funding portfolios.

Australian Prudential Regulation Authority has implied it will require lenders to hold additional capital for investment and interest-only loans.

Suncorp has increased rates on owner-occupier, interest-only and principal and interest loans by between 5 and 12 basis points, while residential lines of credit, which is a prearranged credit limit, are up by 25 basis points.

Tasmanian based MyState is increasing rates on some investment and residential home loans for both interest-only and principal and interest-only by 10 basis points.

Other lenders have also warned about the impact on margins, with Bankwest increasing the maximum loan to value for interest-only investment loans from 80 per cent to 90 per cent.

The RBA board is expected to hold the cash rate at 1.5 per cent when it meets on Tuesday, leaving it unchanged since August 2016.

 

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