More mortgage rate hikes

Via the AFR:

Lenders are blaming rising wholesale and regulatory costs for a new round of increases in fixed and variable products by up to 60 basis points.

Some lenders, such as AMP Bank, the banking division of the nation’s largest financial conglomerate, are announcing the second round of rate or fee rises in three months.

Others, which last year announced increases in their range of fixed rate products, are announcing rises in their range of variable mortgages.

BankWest, a division of Commonwealth Bank of Australia, which last year withdrew its Complete Variable Home Loan investor special rates, has increased rates on its variable investor property home loans for more than $200,000 on loan-to-value ratios of less than 80 per cent by 20 basis points, to 4.54 per cent. The comparison rate increase, which takes account of fees and charges, is 60 basis points.

AMP Bank today increases rates on variable interest rates for new residential investment loans effective. The rate change does not apply to variable interest rates for owner occupied loans or existing investment customers. There’s no change to fixed rates.

Let me make something very plain. Wholesale borrowing cost are falling:


They are at their lowest since 2014:


Rate hikes now are gouging.


  1. “The rate change does not apply to variable interest rates for owner occupied loans or existing investment customers.”

    Makes you wonder if they aren’t simply trying to push investment loan customers to classify themselves as “owner occupiers” to avoid pushing up against APRA speed limits -lets call it “regulatory costs”.

      • The funny thing is that it’s probably not even APRA – it’s probably CBA that gave them a budget/cap for infestor loan growth and so BW management are doing their best to massage the facts.

    • KeenEyeKenMEMBER

      The data matchers at at the ATO and state revenue offices wont be too happy about people BSing about their principal place of residency status. You can only claim one principal place of residence. People may try to claim their investment properties as owner occupied, but they’re more than likely to get caught

      • Its a big deal if you claim a principal residence to ATO when you sell a property as this costs government revenue. But how many people are caught falsely claiming this on loan docs where it would seem a victimless crime (if one at all)? What’s to stop you buying a house with intent to move in, then changing your mind and renting it out? RBA seems to think $48 billion of loans have been reclassified like this in last couple of years as APRA tightened on investment loans, when they relaxed again they all came flooding back and the owner occupiers began to drop out.

      • Stick your property in a trust, rent it to a relative, have your mail sent there if you want.
        ATO prefer low hanging fruit, to keep thier numbers up.
        You just have to make a little effort to obscure it, and its not a problem.

    • Not really. They don’t pay interest on the cash that they probably stole or obtained as bribes due to misusing their position*.

      *I don’t know whether the cash is actually stolen, but neither does anybody else, because there is no anti-money laundering or know-your-customer law when it comes to flogging property. still, you can colour me sceptical when I see a minor foreign bureaucrat plonk down $1.5m for a residence and $150k for his kid’s Mercedes 4WD.

    • Now that right there is extreeeeeemely interesting. If I’ve understood things correctly (which is highly unlikely at the best of times), much of the property “portfolio building” caper involves refinancing existing investment loans to enable the purchase of further properties in a little miniature Ponzi scheme. This will put a crimp in a few property empires for sure.

      • If I reshuffle my share portfolio I encounter a CGT event, I wonder why the same is not applied to refinancing an IP loan?

      • I think you nailed the mechanism. Not so sure about miniature…….monstrous in aggregate that’s for certain. From what I’m seeing this refinancing also frees up extra funds to cover lifestyle and living costs until the next tranche of refinancing (often at 12 month intervals). Cashflow is severely restricted trying to cover the losses between refinancing. Talk about living off the credit card then getting another to pay off the previous.

      • Paul – when you reshuffle shares you usually sell some and buy others. What the property gearers do is borrow against existing property (without selling) and buy more property.

      • thomickersMEMBER

        BankWest freezing new customer loans for refinancing = financial ruin for the ordinary Perth Landlord.

      • @PaulF
        Perth puts the “west” in Bankwest.

        If I recall correctly they started there before the CBA borg assimilated them.

        I recall a good bogan friend of mine remarking with a wry smile that “nothing good ever came from Perth” … and that included him too…

    • AMP only stopped for a few months last year AFAIK, Westpac did similar. Any pause from Bank West likely to be temporary also. I suspect they just cut off the investor lending temporarily to avoid going over growth limits in their investor loan book.

  2. All i can foresee is these rate costs increasing if Trump gets inflation up a bit and cuts back on QE binges.

  3. Diogenes the CynicMEMBER

    The Bankwest news is really about how crap the Perth market is for units. Landlords with highly leveraged units are in trouble as rents are coming down and tenants are harder to find. Obviously the change will make it worse (the opposite of what the bank wants) but that is banks, they are cycle plus plus idiots.