CBA lifts investor interest rates

Effective Monday, ANZ’s variable residential investment property loan index rate will rise by 0.27 percentage points to 5.65 per cent. Fixed rates for new investor home loans will also increase by up to 0.30 percentage points, it added.

“These are historically low rates, you may get a slightly better rate but in the picture of a 10-year commitment these are pretty darn good, ” he said.

ANZ’s move is the latest in a series of steps by lenders after a 43 percent surge in Sydney’s home prices since May 2012 fueled concerns of a property bubble.

ANZ has lifted interest rates for property investors in response to the banking regulator’s efforts to slow investor lending growth.

However, the Commonwealth Bank has had trouble keeping investment lending growth down.

“This is a considered decision that takes into account our customers’ position and the criteria when we look at setting rates, including our competitive position, our regulatory obligations and the state of the residential property market”.

As well, raising interest rates will make lending more profitable at a time when margins are being squeezed by tougher competition and rules forcing big banks to hold larger buffers to shield against bad loans.

The change is designed to even the playing field between the big four banks – the Commonwealth, ANZ, Westpac and National Australia Bank – and smaller banks, which already have higher risk weights, and help shore up the financial system against future crises.

“There is no benefit here for the retail banks to not follow suit”, Macquarie said.

APRA in December introduced regulatory measures to restrict investor lending growth to no more than 10% a year.

As a result of the banks’ tightening steps, the value of new mortgages for investors fell 3.2 percent in May from April, the most since March 2012, government data showed July 10.

It came as analysts predicted the four major banks’ combined profits could be boosted by about $850 million if they all raised investor interest rates by 0.27 percentage points.

Fixed rates for new owner-occupied home lending will be reduced by up to 40 basis points, the lender said.