By Georgia Wilkins
The Commonwealth Bank has become the latest of the big four banks to hike home loan rates, raising borrowing costs for owner-occupiers and property investors just hours after rate hikes from Westpac and ANZ.
The nation's largest bank will raise interest rates on standard variable home loans by 3 basis points to 5.25 per cent effective from May 8. Investors will see a 24 basis point hike to 5.80 per cent.
CBA will also raise borrowing costs on interest-only loans. Rates for owner-occupiers will increase by 25 basis points and 26 basis points for landlords.
The bank blamed "rising costs and regulatory responsibilities" for the rate hikes.
CBA will repay about $586,000 in premiums to 10,000 customers it overinsured when they took out a home loan with the bank.Credit: Louie Douvis
The decision was announced after Westpac and ANZ flagged earlier on Friday that they would raise their rates for interest-only loans. The banks' rate increases come amid a looming crackdown on risky bank lending as concerns about a property bubble are rising.
Westpac, ANZ
Westpac and ANZ's hikes will affect owner-occupiers and investors as well as self-managed retirees.
Westpac decided to lift fixed rates, effective immediately, on a range of interest-only loans by between 17 and 117 basis points. It has also lifted fixed rates for self-managed retirees for non-interest-only home loans.
ANZ said it was lifting variable rates on interest-only home loans and investor loans. Its rates will rise by between 11 and 20 basis points for new interest-only home loans, effective from April 22. Investors will see a 25 basis point rise, effective March 31.
ANZ, Westpac have raised interest rates on interest-only loans amid looming crackdown.Credit: Nicholas Rider
ANZ's group executive, Australia, Fred Ohlsson said the changes reflected a need to "closely manage our regulatory obligations" as well as the bank's risk appetite in a competitive environment.
"We believe this is a balanced decision that reflects the range of regulatory and risk factors, and the pressures on family budgets," he said.
A Westpac spokeswoman said the changes - which are coming a week after it raised some other home loan rates - were in response to increased funding costs.
"In this low-interest rate environment we are offering lower variable and fixed interest rates to customers who make principal and interest repayments to encourage customers to pay down their debt and own their home faster," she said.
Matt Comyn, CBA's group executive for retail banking services, said the May 8 deadline for changes meant that customers could switch to loans with principal and interest repayments.
"We have sought to minimise the impact for the majority of our home loan customers who are Australian families trying to pay off their home," he said.
Bendigo and Adelaide Bank has also increased its residential investment variable interest rate by 25 basis points to 6.01 per cent, effective March 31. It left rates for owner-occupiers unchanged, but also raised the loan-to-valuation cap on residential investor mortgages to 80 per cent.
Bendigo and Adelaide Bank chief executive Mike Hirst said the adjustments reflected the requirement to "meet regulators' expectations in dampening demand for investor lending".
High appetite for risk
Last week, Westpac and National Australia Bank raised variable home loan interest rates for both owner occupiers and property investors.
The head of Australia's corporate watchdog has sounded the alarm over Sydney and Melbourne housing markets, saying they are in the midst of a property bubble.
Meanwhile, new data shows the big four banks still have a high appetite for risk when it comes to interest-only loans compared to other banks.
Figures from the Australian Prudential Regulation Authority, analysed by comparison website finder.com.au, shows interest-only loans make up $575 billion - or 38.5 per cent - of the total $1.5 trillion home loan market.
According to the data, interest-only loans make up 41 per cent of all home loans written in December 2016 by the major banks, but only 29.7 per cent of the rest of the domestic market.