More mortgage rate hikes as funding rocket burns

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From MPA:

National Australia Bank will announce a rate rise for a group of its property investors, according to the Australian Financial Review.

Street Talk has revealed that NAB will up rates by 0.15 of a percentage point for property investors who are paying off principal, as well as interest.

The rate increase is part of a new tiered home loan pricing structure and expected to come into effect on April 4.

The move comes as the bank launches a new mortgage pricing structure where it will group its home loan products by both borrower type (owner-occupier or investor) and loan structure (interest-only or principal and interest).

How dare you pay back principle!

Yesterday we had this, from The Australian:

Commonwealth Bank has become the final big lender to lift ­interest rates for business customers, locking in higher borrowing costs for the bulk of the nation’s businesses and turning attention to whether junior lenders will follow suit or try to steal business.

CBA, the nation’s biggest bank, yesterday advised customers that most business lending rates would increase by 21 basis points, effective tomorrow.

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And mid-tiers are hiking term deposits given they’ve lost access to securitication and wholesale funding, from Banking Day:

Widening margins in wholesale funding markets have prompted some deposit-takers to shift their focus to retail deposits and increase their term deposit rates.

Comparison site Mozo reports that ING Direct, CUA, Newcastle Permanent, Greater Building Society, Arab Bank Australia and Westpac raised TD rates last month.

ING Direct increased its rate on an 11-month deposit by 25 basis points to 3.15 per cent. Mozo said that was the highest rate available for a term of less than 12 months.

Newcastle Permanent is offering 3.1 per cent for seven months and Arab Bank is offering the same rate for four months.

And the cause, rocketing wholesale funding costs, continued to ease yesterday as CBA CDS came off four points to 125bps:

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dyjketdy

More easing is probably a good bet in the near future with the bid in global high yield and as the Tepper panic washes out. However, I expect the rising trend to hold.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.