CBA and ANZ hikes mortgage rates, following Westpac and NAB

All of the major banks have now imposed out-of-cycle rate increases, with CBA, ANZ and Bendigo the latest to hike.

Commonwealth Bank has become the final major bank to hike home loan rates, blaming “rising costs and regulatory responsibilities”. CBA chief executive Ian Narev. (John Feder/The Australian)

Commonwealth Bank has become the final major bank to hike home loan rates, blaming “rising costs and regulatory responsibilities”.

CBA, the nation’s biggest lender, today said variable rates for owner-occupier customers repaying principal and interest will increase 3 basis points to 5.25 per cent, the equal-lowest of the big four alongside ANZ.

Variable rates for interest only owner-occupier home loans will increase by 25 basis points to 5.47 per cent.

Investors paying principal and interest will see their rates rise 24 basis points to 5.8 per cent. Interest-only investment loans will increase by 26 basis points to 5.94 per cent. The changes are effective May 8.

“Rising costs and regulatory responsibilities mean we are increasing home loan interest rates. We have sought to minimise the impact for the majority of our home loan customers,” said Matt Comyn, CBA’s retail banking boss.

CBA’s move follows ANZ and Citibank’s repricing earlier today, as lenders respond to last week’s out of cycle hikes by National Australia Bank and Westpac. Bendigo and Adelaide Bank late today also increased variable investment loans 25 basis points to 6.01 per cent.

The big four control slightly more than 80 per cent of the $1.6 trillion mortgage market.

ANZ said variable property investment loans would increase 25 basis points to 5.85, effective March 31.

While ANZ broke with rivals and left owner-occupier principal and interest rates unchanged at 5.25 per cent — which comprises 80 per cent of its customers that live in their own home — the bank is increasing interest-only loans by of this type by an undisclosed amount from May.

For new customers, ANZ’s variable rates for new investor and owner occupier interest-only loans will increase, effective April 22. Investors who only pay interest will pay 11 basis points more, or 5.96 per cent.

Owner-occupier interest only rates for new customers will increase by 20 basis points to 5.45 per cent.

“These changes reflect a need to closely manage our regulatory obligations, our portfolio risk and the competitive environment,” said ANZ group executive Fred Ohlsson said.

“We believe this is a balanced decision that reflects the range of regulatory and risk factors, and the pressures on family budgets,” Mr Ohlsson said.

NAB and Westpac last week hiked owner-occupier and investor mortgage rates by between three and 28 basis points, blaming elevated funding costs, hot competition and having to comply with APRA’s 10 per cent cap on annual investor lending.

However, analysts have expressed concerns that while higher borrowing costs could help cool the property market, they will also push more heavily indebted customers into stress. Every 10-basis point increase in variable mortgage rates reduces Australian households’ discretionary “free cash flows” by about $1.4 billion, broker CLSA warned this week.

The nation’s regulatory bodies, including the Australian Prudential Regulation Authority and the Reserve Bank, are mulling fresh macro-prudential measures — on top of the existing investor lending cap — to contain “heightened” risks in the property market.

Macquarie, which has about $29 billion of mortgages, yesterday tightened lending standards by reducing the maximum loan-to-valuation for all interest-only loans to 80 per cent. It also advised brokers that variable property investment loans would rise by 25 basis points, effective April 13 for existing customers and immediately for new borrowers.

Interest-only variable rates for owner-occupiers who settled on or before August 23, 2015, will rise by 5 basis points.

Rates for owners making principal and interest repayments — who are deemed more politically sensitive — were left unchanged at a sharp 3.89 per cent for borrowers with a loan-to-valuation ratio of below 80 per cent.

Fellow mid-tier lender Citibank today also hiked all variable mortgage rates by 9 basis points for new and existing customers, effective March 28, according to a note to mortgage brokers obtained by The Australian.

Bendigo and Adelaide Bank late today also increased variable investment loans 25 basis points to 6.01 per cent while owner-occupier rates were held steady at 5.48 per cent. The bank also tightened lending standards by reducing its loan to value ratio cap investor loans to 80 per cent.

Other mid-tier players, such as Suncorp, Bank of Queensland and ING Direct, are yet to reprice their home loan books.

“The sun appears to be setting on the era of record low interest rates and with a number of lenders still expected to follow the big banks’ lead,” said Kirsty Lamont, a director of comparison site Mozo.