Well with BOQ this must be the just about the last of them I think. Something tells me that banks earnings are taking a hit and they need to balance that with some rate hikes n spite of the RBS holding steady. APRA may be just the excuse. Guess we'll find out with CBA announcing their full year results on August 12. If they are even just flat and they make include a conservative outlook then expect all the banks to take a hit that day.
Bank of Queensland raises investor rates, but not for new loans
Date
August 3, 2015 - 3:19PM
Bank of Queensland has joined the list of banks hiking investor home loan rates.
Bank of Queensland is the second major regional bank to hike its home investor loan rates, bumping its standard variable rate up 0.29 per cent in line with other banks.
But it has effectively raised its existing loans while keeping most of its new loans at the same rate. This ensures it will get a boost to margins but also take some market share.
The bank, which has about a $25 billion mortgage book, said it would raise its standard variable investment housing rate for residentially secured investment loans from 5.56 per cent to 5.58 per cent on August 10.
However, rates on its "Clearpath" loans - which already incorporate a discount of more than 1 per cent on its variable rate - will remain unchanged. This is offered to both investors and owner occupier borrowers and now constitute the bulk of its new mortgages.
This means BoQ will effectively retain the same rate on new loans for all mortgages, but raise rates on its existing loans.
Head of retail banking, Matt Baxby, said BoQ has room to grow its investor loans, but it had decided to raise rates to balance its own growth objectives with "recent market developments" and regulatory requirements.
"We are adopting a prudent position that is aligned with the market and balances our own growth objectives with the risks associated with investor lending in general and the overall growth of investor lending in market as a whole," he said in a statement. All of the big four banks and some smaller banks, including Suncorp, ING Direct, AMP, have already announced rate rises on investor loans of between 0.27 and 0.3 per cent. The majors and Suncorp raised the rate for new loans and their existing loans, which will add to profits.
BoQ's investor loans are growing at about 5 per cent, or half the banking regulator's effective cap of 10 per cent per year set in December. Analysts expect BoQ will be among the biggest beneficiaries of the rate rise since 44 per cent of its mortgages go to investors, a similar proportion to Westpac, which has the biggest investor mortgage book among the majors.
The bank said it will also be increasing the "risk requirements" on deposits and for any variations to variable rate investor loans, meaning there will be less room to negotiate on rates.
In a note to clients on Monday, Credit Suisse estimated that the major banks will get a 1 per cent to 3 per cent addition to earnings with the rise in investor loending rates, while Bendigo and Adelaide and Bank of Queensland would add around 3 per cent to 5 per cent.
The high mortgage competition in recent years has hit small lender margins harder than the big banks.
