RBA leaves cash rate on hold at record low1:24
The RBA has left the cash rate on hold at a record low of 2 percent in April. In its statement, the central bank said 'Under present circumstances, an appreciating exchange rate could complicate the adjustment under way in the economy.'
Home loan customers are being stung by out-of-cycle interest rates moves.
HOME loan customers should expect to be hit by more out-of-cycle rate rises in the coming months as lenders follow the Bank of Queensland’s surprise increase to mortgage rates yesterday.
Despite the Reserve Bank of Australia board this week keeping the cash rate on hold at a record-low two per cent, BOQ announced their home loan customers — both owner occupier and investors — would be stung by rate increases.
Variable rates for owner occupiers will rise by 12 basis points while investors will be hit by almost double this with a rise of 25 basis points from April 15.
Industry experts including 1300homeloan director John Kolenda said borrowers who have home loans with other lenders should brace themselves for further increases regardless of whether the RBA moves the cash rate or not.
1300homeloan director John Kolenda expects more out-of-cycle rate moves to come.Source:Supplied
“I’m not surprised by BOQ’s move and I expect more lenders to follow suit,’’ he said.
“Over the next quarter I can see lenders will be increasing their rates because of the cost of funding issue which doesn’t appear to be easing and they need to meet the new APRA requirements.”
Financial regulator Australian Prudential and Regulation Authority (APRA) revealed its crackdown on lending practices which required the major banks to offset costs that require them to hold more capital against home loans to absorb potential losses.
BOQ’s clear path variable rate home loan will rise to 4.72 per cent for owner occupiers and 5.14 per cent for investors.
The announcement comes after the lender recorded a seven per cent rise in cash profit to $179 million in the six months through to February.
Financial comparison website RateCity’s figures show on a $300,000 30-year loan the average standard variable rate is 4.61 per cent and the average three-year fixed rate is 4.38 per cent.
The bank’s chief executive officer Jon Sutton said the decision was not made lightly and was a result of the “fiercely competitive market and increased funding spreads.”
Bank of Queensland’s chief executive officer Jon Sutton announced out-of-cycle rate hikes this week. Picture: Peter WallisSource:News Corp Australia
Aussie Home Loans’ general manager of product and strategy David Smith said it was up to borrowers to demand better deals, “now’s the time to push their exist lender harder and shop around to see what other lenders have got.”
Financial comparison website RateCity’s spokeswoman Sally Tindall said, “the major banks have made it very clear that they are not beholden to the RBA and the cash rate.”
“It’s well within their rights to lift rates within coming months and could be likely with wholesale funding going up in the first of half of this year which puts a squeeze on their profit margins.”
sophie.elsworth@news.com.au