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Westpac group hike fixed rates for interest-only loans

by Lucy Dean4 minute read
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Rates for interest-only investment loans have been raised by up to 20 basis points across all four of Westpac group’s retail banks.

As of this week (starting 22 May), rates at St. George Bank, BankSA and Bank of Melbourne have risen by 20 basis points for one, two, three, four and five-year fixed rate interest-only loans on residential investment properties.

The standard fixed rates (interest-only) now start from 4.79, 4.79, 4.89, 5.19 and 5.19 per cent respectively.

Westpac has also bumped up rates on fixed rate investment property interest-only loans by 20 basis points for one through to 10-year loans.

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Customers on one, two and three year loans will see rates grow to 4.86, 4.86 and 4.96 per cent respectively, while customers on 10-year loans will see rates jump to 7.17 per cent.

Westpac has also bumped up rates on interest-only repayments for SMSF and non-resident fixed investment property loans. These now start from 6.46 and 6.19 per cent, respectively.

At Westpac’s smaller banks, owner occupier rates for principle and interest loans generally remain unchanged, except for in the third year when rates drop by 21 basis points, bringing rates to 4.03 per cent.

For residential investment loan holders paying principle and interest loans the same trend in the third year is reflected, with rates dropping by 30 basis points to 4.14 per cent.

These rate changes come following a clamping down on new interest-only lending by the Australian Prudential Regulation Authority (APRA) in March. The supervisory measures instruct Authorised Deposit-taking Institutions (ADIs) to limit new interest-only lending to 30 per cent of total new residential mortgage lending.

In April, the Australian Securities and Investments Commission (ASIC) also announced a targeted industry surveillance campaign designed to ascertain whether lenders and brokers were “inappropriately recommending more expensive interest-only loans,” the regulator said.

[Related: Westpac hikes interest-only rates]

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