In response to industry-wide concerns around investor lending growth, two more banks have announced increases to their interest rates on investor home loans.
Bendigo Bank has announced it will increase its residential investment standard variable interest rate by 20 basis points, while the bank's residential investment package variable rate will also increase by 20 basis points for new business and most existing investor variable rate loans.
Bendigo and Adelaide Bank managing director Mike Hirst said implementing this measure supports the lender’s prudent management by appropriately pricing for risk, and assists in restraining investor mortgage book growth to less than 10 per cent per annum as required by APRA.
“When it comes to setting interest rates, our bank takes into account a wide range of factors and carefully considers its key stakeholders including borrowers, depositors, staff, shareholders, partners and the wider community,” Mr Hirst said.
“We believe this approach considers the needs of our stakeholders while continuing to provide customers with market competitive rates."
The adjustment is effective 1 September for new business and 1 October for existing residential investment loans.
Meanwhile, ME will increase its Basic Variable home loan interest rate for new investor borrowers by 40 basis points to 4.69 per cent and its Flexible home loan, with a member package interest rate, for new investor-borrowers will increase by 0.36 per cent to 4.89 per cent, effective 15 September.
Rates across existing investor loans will also rise by 0.41 per cent.
ME also announced that its fixed rates for new owner-occupier borrowers will fall between 0.09 per cent and 0.50 per cent across three- to seven-year terms, with its three-year fixed rate falling 0.09 per cent to 4.19 per cent.
Jamie McPhee, chief executive of ME, said the changes have been precipitated by major shifts in the banking industry that have forced banks, including ME, to review their lending practices and pricing.
“APRA introduced new regulatory measures to reinforce sound residential lending practices last December, including actions to restrict investor lending growth to no more than 10 per cent per annum,” Mr McPhee said.
“The changes we have announced today will advantage owner-occupied borrowers particularly those seeking to buy their first home,” he said.
“The decision to increase investment rates was a difficult one, but after careful consideration we believe that combined with rate cuts across selected owner occupied home loans it strikes the right balance across our portfolio.”
[Related: Top broker sees impact of market changes]