Bank of Queensland (BOQ) will increase interest rates on its variable home loans for both owner-occupiers and investors following double-digit loan growth in the first half of the 2015-16 financial year.
Effective 15 April, the regional bank will raise its variable rates by 25 basis points for investors and by 12 basis points for owner-occupiers.
The changes will see the rate for BOQ’s standard variable loan lift to 6.28 per cent for investors and to 5.86 per cent for owner-occupiers, while the rate for its Clear Path variable loan will rise to 5.14 per cent for investors and 4.72 per cent for owner-occupiers.
BOQ chief executive Jon Sutton said the changes were driven by the need to balance growth, risk and margins over the longer term.
“This is not a decision that was made lightly and we were very mindful of the impact on our customers, even in an environment where interest rates remain at very low levels,” Mr Sutton said.
“However, given the fiercely competitive market and increased funding spreads and hedging costs, these increases are necessary to help us achieve the appropriate balance between growth, asset quality and profitability.
“We still retain very competitive products and pricing, particularly with our lead mortgage product Clear Path, which will enable us to continue to compete strongly in the segments we want to target.”
BOQ’s rate hikes come after the bank posted 12 per cent growth in its home lending portfolio over the first half of 2015-16, with brokers accounting for 19 per cent of all loans written – up from 13 per cent on the corresponding period a year ago.
But despite the bank’s solid growth in its loan book, AFG noted that BOQ lost market share in the first quarter of 2016, according to the aggregator’s latest competition index.
“BOQ fell from a peak of 7 per cent during the quarter to 2.5 per cent as it experienced difficulties processing the volume of loans it received,” AFG’s general manager of sales and operations, Mark Hewitt, said.
[Related: BOQ appoints new broker head]
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