Westpac has followed rival NAB by raising its variable mortgage rates for owner-occupiers and investors.
TWO down, two to go. Westpac has joined rival National Australia Bank in hiking mortgage interest rates for investors and owner-occupiers.
Interest-only investor loans will be hardest hit, increasing by 28 basis points to 5.96 per cent per annum. Principal and interest investor loans will increase by 23 basis points to 5.79 per cent.
The bank will also raise its owner-occupier rate by three basis points to 5.32 per cent, while interest-only owner-occupier loans will increase by eight basis points to 5.49 per cent.
The changes will come into effect from next Friday, 24 March. “Today’s changes are in response to increasing funding costs,” Westpac consumer bank chief executive George Frazis said.
“Despite home loan interest rates being at historically low levels, both deposits and wholesale funding of mortgages have increased over the last nine months.
On Thursday, NAB jacked up its investor loans by 25 basis points in a bid to keep growth in the segment under 10 per cent as mandated by the Australian Prudential Regulation Authority. It came after a warning from JP Morgan that investors who rely on property cashflows to meet mortgage repayments could face rate hikes of up to three per cent in the near future.
“We understand the significance of interest rate changes to our home loan customers, so we take a very careful approach to these decisions,” Mr Frazis said. “We try to balance the needs of both owner occupiers and investors in making these decisions while continuing to provide customers with a competitive offering across our range of products.
“Importantly, we are offering lower interest rates to customers who make principal payments to encourage customers to pay down their home loan in this low interest rate environment.”
Mr Frazis said customers with interest-only loans who wish to move to principal and interest repayments can do so without paying a switching fee until 17 June 2017.
Small business variable loans will also increase by eight basis points, with those changes coming into effect on 3 April.