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Investor rates rise ahead of RBA meeting

by James Mitchell11 minute read
Investor rates rise ahead of RBA meeting

An Australian bank heavily reliant on the third-party channel has this week lifted its rates for new residential property investment home loans in an effort to manage funding costs.

AMP Bank yesterday told The Adviser that it has increased rates on variable interest rates for new residential investment loans, effective 6 February 2017. The rate change does not apply to variable interest rates for owner-occupied loans or existing investment customers. There is also no change to AMP Bank’s fixed rates.

The AMP Bank Investment Basic Variable Loan will increase 10 basis points to 4.31 per cent. The AMP Bank Investment Professional Package variable loan will increase 20 basis points to 4.34 per cent for loans above $750,000.

“A number of factors feed into any interest rate decision including competitive landscape, the need to manage wholesale funding costs and maintain a balanced portfolio in line with regulatory guidelines. We remain focused on providing competitive interest rates,” an AMP spokesperson said.


The rate hike, which was not made public through a media release, comes after NAB chief executive Andrew Thorburn flagged funding pressures following the release of the group’s December quarter earnings.

Mr Thorburn said the current operating environment “has some challenges with funding costs remaining elevated and competition still intense.”

The market is eagerly anticipating the outcome of the Reserve Bank’s first monetary policy meeting of 2017 later this afternoon. Economists expect the board members to comment on the continued strength of investor lending.

AMP Capital chief economist Shane Oliver noted that while housing credit growth was unchanged at 0.5 per cent month-on-month (or 6.3 per cent on an annualised basis) in December, a continued deceleration in owner-occupier housing credit relative to investor credit was "concerning".

“Over the last three months investor housing credit rose at an annual rate of 9 per cent and is now rapidly approaching APRA’s 10 per cent threshold,” Mr Oliver said.

“It is increasingly clear that the dampening impact of APRA’s 2015 macroprudential tightening has worn off to a significant degree,” he said.

“With household income growth in the economy running well below 10 per cent year-on-year and the Sydney and Melbourne property markets continuing to run too hot in the face of ultra-low interest rates there remains a case for APRA to further lower the 10 per cent growth threshold for property investor credit.”

[Related: Elite broker says more lending curbs are coming]

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James Mitchell


James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.