Australia: New round of mortgage rate rises hit borrowers

Lenders in Australia have again increased fixed and variable interest rates on their investment loan products. AMP Bank, for example, increased its Investment Basic Variable loan by 10 basis points to 4.31% and its Investment Professional variable loan by 20 basis points to 4.34%. Similarly, Bankwest increased its variable investor property loan by 20 basis point to 4.54%. There are number of reasons why the increases have occurred, according to a bank spokesperson, “A number of factors feed into any interest decision including competitive landscape, the need to manage wholesale funding costs and maintain a balanced portfolio in line with regulatory guidelines.”

Interest-only home loans are expected to be the focus for lenders in 2017, with CBA noting that it is looking to reprice this product in March. Interest-only home loans are of concern to lenders as financial stress may increase for borrowers as interest rates rise and they have no means to pay off the principal.

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