Westpac to raise home loan rates

According to Westpac’s ASX statement, the headline owner-occupier home loan variable rate will increase to 5.68% (comparison rate 5.82%).

The New Zealand dollar has risen to a four-month high against its trans-Tasman counterpart on speculation mortgage rate hikes by Westpac may put pressure on the central bank to ease policy.

The changes apply only to Westpac-branded loans, not St George, Bank of Melbourne or BankSA.

Regardless of Westpac blaming the hike on rules that force the bank to hold larger loss-absorbing capital buffers, it doesn’t change the fact that many buyers will take this as a clear indicator of future unpredictability as banks clearly signal a willingness to be out of step with the RBA.

The government would have more to say on capital adequacy when its response to the financial system inquiry, chaired by former banker David Murray, is made public, she told reporters in Canberra. 5 billion although a one-for-23 renounceable entitlement supply aimed toward lifting its capital reserves.

“This is a hard decision and one that is not taken lightly”.

The assistant treasurer, Kelly O’Dwyer, said it was up to Westpac to justify its rate hikes.

Interest rates are at a record-low as the RBA has sought to boost consumer spending and non-mining sectors of the economy while an unprecedented resources investment boom fades.

Westpac, Commonwealth Bank and National Australia Bank didn’t pass on the May rate cut in full.

Cash earnings, the measure more closely watched by analysts and which strips out volatile items, was an unaudited Aus$7.8 billion, a three percent increase from a year ago.

Chief executive Brian Hartzer said the result was driven by “a solid operating performance, supported by strong gains in customer numbers”.

Westpac also said it would pay a fully franked dividend of 94 cents for the 2015 year, up 2 per cent on the previous year.

Westpac says this raising places its capital ratio “within the top quartile of banks globally”.

The additional $3.5 billion in CET1 capital means the total amount of capital raised this year by the major bank in response to regulatory changes is about $6 billion.

“The major banks account for about 80 per cent of mortgages, so 80 per cent of those with a mortgage would have seen their rate go up”, he said.