Auswide Bank has announced that reference rates for investment home loans will increase by 13 basis points (0.13 per cent) from 5 April 2017 and that it is also reducing the maximum LVR on new investment loans.
Managing director, Martin Barrett said customers with an investment home loan paying the bank’s new standard variable rate of 5.85 per cent on a $250,000 loan will see their repayments increase by $20.68 a month (principal and interest home loan over 30 years).
“Of course many of our investment loan customers are on rates less than the standard variable rate based on the size of their loan and any mortgage package they may have qualified for,” he said.
He added that the decision protects the bank’s position in balancing its funding costs and lending income.
“As we recently reported to the market, our operating margin continues to sit just under 2 per cent, as it has done for many years,” Mr Barrett commented.
The rate increase and a decision to reduce the maximum acceptable LVR to 90 per cent or less on new investment home loans reportedly "reflects recent market conditions and prudent management of the bank’s lending in the current environment".
“We’ve witnessed a host of lenders, both large and small, bank and non-bank, all announce similar responses in respect to rate and lending policy over the last few days and weeks," he said.
Mr Barrett announced Auswide Bank has also launched a new 12-month term deposit rate of 2.75 per cent with interest paid on maturity.
“At the end of 2016, 63 per cent of our funding was sourced from retail depositors, so it is important we attract new deposits to support both our existing lending and growth objectives,” he said.
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Annie Kane is the editor of Mortgage Business.
As well as writing news and features on the Australian mortgage market, financial regulation, fintechs and the wider lending market – Annie is also a regular contributor to the Mortgage Business Uncut podcast.
Before joining Momentum Media in 2016, Annie wrote for a range of business and consumer titles, including The Guardian (Australia), BBC Music Magazine, Elle (Australia), BBC Countryfile, BBC Homes & Antiques, and Resource magazine.