AMP Bank raises variable rates

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Journalist

12:29, Jul 12, 2018

5 minute read

The financial services company has become the latest lender to announce off-cycle rate hikes due to rising funding costs, raising its variable rates on new and existing business.

AMP Bank has increased its variable lending rates for all homeowners and investors.

The changes will be effective for new business from tomorrow July 13 and for existing business from Monday July 16.

The changes are as follows:

  • 8 basis points for homeowner loans in principal and interest
  • 17 basis points for investment principal and interest loans
  • 17 basis points for homeowner loans and interest-only loans

The news follows similar changes made at the end of Junewhen AMP raised rates on its interest-only home loans for homeowners (new businesses) by 40 basis points.

Interest rates on fixed-rate loans, some of which fell as much as 70 basis points last month, will not change.

Speaking about the changes, AMP Bank Group leader Sally Bruce said the decision was made due to an increase in funding costs.

“We manage our portfolio in a very active market and our rate decisions are never taken lightly,” said Ms. Bruce.

“We have delayed passing this cost on to customers for as long as possible and, in fact, we have not raised interest rates for existing customers since June last year.

“With any change, we are focused on balancing the interests of our customers, the regulator and our business.”

The move comes as a series of lenders have hiked rates in response to rising funding costs.

On Monday, July 9, Macquarie Bank announced that variable rate homeowner loans with principal and interest repayment will increase by 0.06 percentage points, while those with interest only repayment will increase by 0.10 percentage points. in all LVR slices. .

Floating rate investment and SMSF loans will increase by 0.10 percentage point.

Macquarie will lower its three-year fixed rate by 10 basis points for all homeowner and investor loans.

The changes go into effect July 13 for new customers and July 23 for existing customers.

ING also signaled the need to raise rates by 10 basis points this week for variable owner-occupied mortgages, while non-bank lender Pepper also reportedly raised rates by as much as 55 basis points recently.

Addressing sister title The Adviser Mortgage business recentlyAuswide Bank’s chief financial officer (CFO), Bill Schafer, attributed the lender’s decision to raise interest rates on its mortgage products to the sharp rise in the bank note swap (BBSW) rate.

“Our funding costs have increased significantly over the past four months,” Schafer said.

“The BBSW – the 30-day rate and the 90-day rate – has had a big effect on our wholesale funding lines, and they’ve gone up 30 to 35 points since early March, so it’s had a substantial effect on our net interest margin.

“We tried to absorb this throughout this period, in the hope that these costs would be relieved and BBSW rates would come down, but now we are approaching the end of the fourth month, we have made the decision that the impact on our net interest margin is too severe, and unfortunately we had to increase rates out of cycle.

The recently published Deloitte Australian Mortgage Report 2018 also noted that fundraising costs were rising and suggested this was the biggest challenge for non-majors.

“We have seen that over the last fortnight some of the non-majors have had to move their standard floating rate in response to movements in the underlying BBSW spread on cash,” said services partner James Hickey. Deloitte financials.

“The majors have so far been able to absorb this and not pass this movement on. They may well get there soon, but it just shows the heightened level of sensitivity of regional lenders to wholesale funding markets.

[Related: Lenders hike rates as funding costs spike]

AMP Bank raises variable rates



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Last update: March 09, 2022

Posted: July 12, 2018

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