Invest
So it begins: Major bank hikes rates, who will follow?
A major bank has broken rank to hike interest rates by 14 basis points. Who will be next?
So it begins: Major bank hikes rates, who will follow?
A major bank has broken rank to hike interest rates by 14 basis points. Who will be next?
Westpac has hiked interest rates by 0.14 per cent (14 basis points). It’s the first major bank to raise rates.
The big four bank said the hike reflected broader wholesale funding costs, with all variable mortgage rates to jump 14 basis points as of 19 September 2018 for both new and existing customers.
“This is a tough decision but we have a responsibility to price our mortgage products in a way that reflects the reality of our funding costs,” Westpac’s chief consumer banking executive, George Frazis, said.
“Wholesale funding is an important component in our mortgage pricing. In particular the bank bill swap rate, which is a key wholesale funding rate for mortgages, increased by about 25 basis points between February and March this year and has remained elevated.”
He said he expects the wholesale funding costs to remain high for the “foreseeable future”.
Finder.com.au money expert Bessie Hassan said, “The question on everyone’s lips is – when will the others follow?
“My guess is sooner rather than later – expect other announcements in the coming days.”
“As the threat of other lenders increasing their rates grows we expect to see more borrowers opting to lock in a fixed interest rate,” she said, suggesting a new benchmark has been set.
“Borrowers want a three in front of their home loan rate – and that’s the case for variable and fixed rates alike.”
According to a recent finder survey, almost two in five mortgage holders plan to fix their home loan in the next year, “spooked” by the out-of-cycle rate hikes.
The other 62 per cent plan to wait and see.
However, borrowers will face different refinancing conditions, S&P Global Ratings has warned.
While the rate of arrears remains steady, it predicts the number will rise as softening property prices, rising interest rates and tougher refinancing conditions, for some, take their toll.
“While arrears are holding steady for the moment, prepayment rates have slowed,” the ratings agency added.
“This slowdown could be attributable to factors such as the growth in interest-only lending in recent years, refinancing pressures for some borrowers, and the growth in loan-offset facilities.
“A slowing in prepayment rates can precipitate a rise in arrears if it reflects a slowdown in refinancing activity, a common way for borrowers to manage their way out of financial difficulty. Borrowers of a lower credit quality are more susceptible to this risk.”
S&P said it doesn’t predict refinancing to become the dominant cause of a slowdown in prepayment rates due to most of the loans’ low credit risk profiles.
“Around 70 per cent of loans in [this] sector are to owner-occupiers, 80 per cent of loans are principal-and-interest loans, and around 72 per cent of loans have a loan-to-value ratio of 75 per cent or less. Credit collateral is therefore relatively strong and likely to weather some deterioration in key macroeconomic variables,” it said.
Property
ANZ now expects house prices will end the year lower
With higher interest rates on the horizon, the bank is forecasting larger house price declines than previously expected. ...Read more
Property
Which capital cities are most attractive to property investors?
A new survey has suggested that investor attention is shifting away from Australia’s two largest capital cities. ...Read more
Property
Market uncertainty fails to discourage foreign property investors
While interest from foreign investors in Australian property has remained strong, HLB Mann Judd warned that tax increases could see demand shift to other markets. ...Read more
Property
Regional renters forced to spend more of their income than ever before
Renters in regional areas are spending nearly as much on rent as home owners are spending on mortgage repayments. ...Read more
Property
Aussie home buyers now need to save for over 11 years for a deposit
Since early 2020, the time needed to save for a deposit has increased by more than two years. ...Read more
Property
HSBC forecasts 2023 house price decline of up to 10%
The firm had previously predicted a modest rise for house prices next year. ...Read more
Property
Perth house prices continue climbing to a record high
While growth may have come to an end in Sydney and Melbourne, Perth house prices are still on the rise. ...Read more
Property
Stamp duty significantly slowing path to purchase for FHB
Saving for a home takes years for the typical first-time buyer. In Australia’s largest cities, as much as two years are spent simply building up the funds to pay the cost of stamp duty, according to...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Property
ANZ now expects house prices will end the year lower
With higher interest rates on the horizon, the bank is forecasting larger house price declines than previously expected. ...Read more
Property
Which capital cities are most attractive to property investors?
A new survey has suggested that investor attention is shifting away from Australia’s two largest capital cities. ...Read more
Property
Market uncertainty fails to discourage foreign property investors
While interest from foreign investors in Australian property has remained strong, HLB Mann Judd warned that tax increases could see demand shift to other markets. ...Read more
Property
Regional renters forced to spend more of their income than ever before
Renters in regional areas are spending nearly as much on rent as home owners are spending on mortgage repayments. ...Read more
Property
Aussie home buyers now need to save for over 11 years for a deposit
Since early 2020, the time needed to save for a deposit has increased by more than two years. ...Read more
Property
HSBC forecasts 2023 house price decline of up to 10%
The firm had previously predicted a modest rise for house prices next year. ...Read more
Property
Perth house prices continue climbing to a record high
While growth may have come to an end in Sydney and Melbourne, Perth house prices are still on the rise. ...Read more
Property
Stamp duty significantly slowing path to purchase for FHB
Saving for a home takes years for the typical first-time buyer. In Australia’s largest cities, as much as two years are spent simply building up the funds to pay the cost of stamp duty, according to...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
