Rising ANZ loan rates to dampen investor lending growth

By Kirsty Timsans ·

In a bid to further rein in investor lending growth ANZ has increased variable and fixed rates on residential investment property loans.

  • UPDATE: Commonwealth Bank is also set to increase rates by 0.27% to 5.72% p.a on its Standard Variable Rate for investor home loans and by between 0.10% to 0.40% p.a with its fixed rates for 1,2,3,4 and 5 year investor home loans.

ANZ announced yesterday that from August 10 the variable rate on its Residential Investment Property Loan will rise by 0.27% to 5.65%, while fixed rates for new residential investment lending will also increase by up to 30 basis points.

ANZ CEO Australia Mark Whelan said the decision was “difficult but necessary in the current environment” given that interest rates for residential property investors are at historical lows.

“It allows us to balance the mix of our lending between owner occupied and investment lending as well as the impact of changing market conditions. This includes a decision to cut fixed rates for new owner occupied home lending,” he said.

“This is a considered decision that takes into account our customers’ position and the criteria we look at when setting rates including our competitive position, our regulatory obligations and the state of the residential property market.”

The interest rate rise follows other ANZ measures to dampen investor lending growth over the past few months including reducing interest rate discounts and imposing higher deposit requirements to at least 10%.

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In December 2014, the Australian Prudential Regulatory Authority (APRA) urged banks to limit the growth in investment mortgage lending to just 10% annually, in response to rising house values in Australia’s state capitals.  

APRA’s May banking statistics revealed that ANZ’s residential property investment loan book was above this threshold, growing at an annualised rate of 12% in May and 10.4% over the three months to May.

In fact the APRA figures show that all the big banks, excluding Westpac, had investor loan growth rates above 10% in May as well as AMP, Macquarie Bank, ME and Teachers Mutual Bank. If these banks don’t heed the benchmark set by APRA they are at risk of regulatory action.

There is no change to any other ANZ variable lending rates on owner occupied home loans for business lending. Fixed rates for new owner occupied home lending will be reducing by up to 40 basis points, effective from August 10.

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