Finance Finance News Smaller banks follow on rate hikes

Smaller banks follow on rate hikes

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The total number of mortgage lenders lifting rates in response to tighter capital regulations has reached 15, with small and regional banks following the lead of the big four.

The smallest out-of-cycle increase in standard variable mortgage rates was from the Bendigo and Adelaide Bank, which added 12 basis points (0.12 per cent), bringing its rate to 5.68 per cent.

The next smallest increase, according to figures compiled by comparison site finder.com.au, was from credit union CUA which raised its standard rate by 13 basis points to 5.06 per cent – the cheapest rate offered amongst the 15 lenders (see table below).

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Bessie Hassan, consumer advocate at finder.com.au commented: “So far, the biggest increase was 0.20 percentage points by four lenders: Westpac, Macquarie Bank, Citibank and ME Bank, while the average rise was 0.17 percentage points.

rates-table

“This will add an extra $33 per month to a $300,000 mortgage, as well as putting more pressure on many households who are preparing for the most expensive time of year at Christmas.”

The out-of-cycle rate increases are an attempt to pass on costs incurred by banks, which have been forced by the Australian Prudential Regulatory Authority to hold larger capital reserves and, in the case of the big four, to use more conservative risk weightings for their mortgage portfolios.

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