Loan

Credit News

ANZ lifts interest-only home loan rates, but cuts principal and interest loans, home loans rates.#Home #loans #rates


ANZ lifts interest-only home loan rates, but cuts principal and interest loans

Eryk Bagshaw

NAB’s long term plan

Home loans rates

More BusinessDay Videos

Home loans rates

ANZ Bank first half profit

ANZ Bank first half profit

Up Next

NAB’s long term plan

Home loans rates

Home loans rates

NAB’s long term plan

NAB’s long term plan

Up Next

ASX winners and losers – a snapshot

Home loans rates

Home loans rates

ASX winners and losers – a snapshot

ASX winners and losers – a snapshot

Up Next

Business leverages marriage equality vote

Home loans rates

Home loans rates

Business leverages marriage equality vote

Business leverages marriage equality vote

Up Next

How do share bike companies make money?

Home loans rates

Home loans rates

How do share bike companies make money?

How do share bike companies make money?

Up Next

Migrants caught in million-dollar visa scam

Home loans rates

Home loans rates

Migrants caught in million-dollar visa .

Migrants caught in million-dollar visa scam

Up Next

Sydney’s ‘Silicon Place’

Home loans rates

Home loans rates

Sydney’s ‘Silicon Place’

Sydney’s ‘Silicon Place’

Up Next

ASX 200 breaks 6000, but where to now?

Home loans rates

Home loans rates

ASX 200 breaks 6000, but where to now?

ASX 200 breaks 6000, but where to now?

ANZ Bank first half profit

ANZ Bank has hiked rates on interest-only home loans for the second time in three months, amid further signs the regulators’ crackdown on riskier lending has put the brakes on the mortgage market.

The big four lender on Friday said it would raise interest rates for customers with interest-only loans by 0.3 percentage points, while cutting rates for customers who are paying principal and interest by 0.05 percentage points.

The hike came as new figures showed the number of home loans taken out by Australians has fallen to a two year low, fuelling speculation of a property downturn.

Related Article

Home loans rates

Australia stumbles to economic record as cautious Reserve Bank leaves rates on hold

The figures, released by the Australian Bureau of Statistics on Friday, show loans to investors have fallen to their lowest level in seven months, down from a high of above 50 per cent in January.

The number of all home-loan approvals dropped 1.9 per cent in April after falling for the third month in a row, while the value of new lending to investors dropped 2.3 per cent.

  • SHARE
  • Share on Facebook
  • Share on Twitter
  • Link

Home loans rates The bank said the cut would benefit 80 per cent of its owner-occupier customers, who were paying principal and interest. Photo: Louise Kennerley

You will now receive updates from Business AM Newsletter

Business AM Newsletter

Get the latest news and updates emailed straight to your inbox.

By submitting your email you are agreeing to Fairfax Media’s terms and conditions and privacy policy.

ANZ’s rate increase, which follows a hike in property investor and interest-only rates in March, will mainly affect property investors, who regulators view as a key source of risk in the housing market.

ANZ said 80 per cent of its owner-occupier borrowers will receive a rate cut, because they have principal and interest loans.

Suncorp also announced it was raising interest rates on Friday, and its increase of 0.12 percentage points will affect only property investors.

The rate increases come after the banking regulator in March unveiled tough new curbs on interest-only lending by banks, amid concerns about “heightened risk” in the property markets of Sydney and Melbourne.

ANZ’s group executive in charge of its Australian arm, Fred Ohlsson, said the bank’s rate moves were a response to “regulatory obligations”, and a desire to encourage more borrowers to pay back principal on their loans.

“While we know those only paying interest on their loans will be disappointed, we need to manage our regulatory obligations and we are now required to hold additional capital against our home loans. We also need to better balance our portfolio towards those paying off their homes,” he said.

We need to better balance our portfolio towards those paying off their homes.

“There are clear benefits for our customers to be paying off their loans and we have made this as easy as possible by removing fees associated with moving across from interest-only loans.”

Combined with a fall in lending to property investors in March, Friday’s drop in loan approvals represents the steepest decline in loans to investors since the last time the Australian Prudential Regulation Authority (APRA) was forced to take action against risky investor lending in mid-2015.

JP Morgan economist Henry St John said there was evidence the Sydney and Melbourne property markets were cooling as the tightening of interest only mortgages placed “fairly immediate downside pressure”.

House prices fell nationally for the first time in 18 months in May, led by a 1.3 per cent drop in Sydney and 1.7 per cent in Melbourne, according to CoreLogic.

In good news for first home buyers, loans to those trying to get into the market crept up to 13.9 per cent, from 13.5 per cent in March, but remain at historic lows.

In recent years, it has been almost unheard of for banks to cut their interest rates on home loans independently of the Reserve Bank.

The chair of the government’s banking inquiry, David Coleman, this week cited findings that on 19 out of 20 occasions when banks had moved their home loan rates independently from the central bank, customers had been left worse off.

Suncorp also pointed to regulatory changes in explaining its decision on Friday to raise variable interest rates on investor home loans by 0.12 percentage points.

Unlike some banks, Suncorp does not charge a separate rate for interest-only loans, which are most popular with property investors.

Suncorp’s banking and wealth chief executive, David Carter, said the bank was complying with the Australian Prudential Regulation Authority’s restrictions, but it needed to act after other banks raised rates for investors in recent months.

“With the market having effectively repriced investor lending, and with some lenders having opted out of certain aspects of the investor market, it’s important for us to manage the demand for new business,” he said in a statement.


Leave a Reply

Your email address will not be published. Required fields are marked *