Speaking to Mortgage Business’s sister publication Real Estate Business, Century 21 owner Charles Tarbey expressed his concern over the decision of many Australian banks to follow the majors in raising mortgage rates for both landlords and homeowners.
“Other banks have followed suit,” Mr Tarbey said. “They don’t seem to think independently at all. People suggest that they do but obviously they don’t.”
“They have raised rates against everybody, not just investors. APRA was focused on investment and the banks are not, the banks are focused on the total dollar. That’s the thing that concerns me the most.”
According to comparison website Finder.com.au, three of the four major banks – ANZ, CBA and Westpac – plus 10 other lenders lifted their variable home loan rates on Friday.
Bessie Hassan, consumer advocate at Finder.com.au said despite most owner-occupiers starting to feel the pressure with rising rates, investors are “still getting the brunt of the bad news”.
Most of the lenders that have announced rises have increased both of their owner-occupied and investment home loan rates, except for two lenders – AMP Bank and Citibank, which only increased their owner-occupied home loan rates, Ms Hassan said.
“Three of the 18 lenders have increased investment variable home loan rates higher than owner-occupied: Adelaide Bank, Bendigo Bank and CUA,” she said.
“However, while the average increase was the same across both owner-occupied and investment home loans – of 0.17 percentage points – standard variable rates are generally higher for investors.
“A 0.17 percentage point rate rise will cost borrowers with a $400,000 mortgage about $42 extra per month or over $500 in a year.
“On average, these lenders are offering a standard variable rate of 5.70 per cent for investment loans and 5.50 per cent for owner-occupied loans – a difference of 0.20 percentage points.”
The banks have defended their decision to increase rates as they look to raise enough capital to meet APRA’s new requirements.
Following the release of ANZ’s full-year results last month, ANZ chief executive Mike Smith said it is “a balance” when deciding whether the customer or the shareholder pay for additional capital.
“It is not an easy balance to get exactly right. The issue is that when you have regulatory capital in position, somebody has to pay for it – it doesn't come for free,” Mr Smith said.
“We have seen the shareholders take a lot of the pain. Since those announcements, share prices have dropped by 20 per cent.
“They have taken a fair amount of that pain. So it is appropriate that customers have to take some of that pain as well in terms of the benefits of having stronger banks.”