More than 20 mortgage lenders have discreetly increased loan rates in the past six weeks with other major banks expected to make repayment announcements over coming weeks, according to analysis of rate changes.
Rate rises mean the difference between the highest and lowest standard variable rate ranges from about 3.85 per cent to 6.11 per cent, or nearly $300 dollars in monthly repayments on a $1 million mortgage.
The 2.26 per cent spread between the highest and lowest standard variable rate is more than the official cash rate, which is 2 per cent, according to analysis by Canstar, a company that provides analysis of interest rates for financial products, such as mortgages and insurance.
The rises come as lenders face profit-margin pressure because of rising costs to wholesale funding at a time when they also need to build up large capital reserves to meet new prudential rules.
Bank lending practices and culture are also under scrutiny amid calls for a royal commission and key profit-drivers, such as property lending, are under pressure as demand eases and concerns rise about over-supply in some markets.
Big recent increases include Macquarie Bank raising rates on its Basic Flyer variable owner-occupied loans by 50 basis points to 4.64 per cent and Mortgage House increasing its advantage variable by 45basis points to 4.64 per cent.
Other banks, such as Bank of Queensland, are set to lift interest rates for housing investor loans by 25 basis points, with owner-occupiers also facing increases.
Some banks, such as Adelaide Bank, are preparing to take on more risk by scrapping their maximum 80 per cent loan-to-valuation limitation for investment properties in the Sydney metropolitan area.
Brokers claim the move is a bid to build market share in the lucrative Sydney market as other capitals, including Perth and Darwin, continue to tank and concerns grow about off-the-plan and investment lending in central Melbourne.
Bank of Melbourne, St George Bank and Bank South Australia will next month announce they are changing the way interest-only loans are calculated for new and existing customers.
The banks currently calculate 12 equal monthly repayment amounts that do not vary due to the number of days in a specific month.
Under the new arrangements they will be based on the outstanding balance on the day of calculation and charged monthly.
According to confidential bank data, it means a client with a loan balance of $500,000, paying 4.5 per cent and no offset account will be paying $1726 on a 28 day month, which is a reduction of $149.
But repayments will rise to $1910 for a 31 day month, a rise of $35.
"Customers can be assured that they will pay no additional interest as a result of this change. In line with industry practice, the banks are changing their interest-only loans so that interest is calculated on the number of days in a month," a bank spokesman said
The banks claim the changes, which will be introduced from May 23, make it easier for customers to understand and staff and brokers to explain to clients.
"There is no change to a customer's payment cycle, next payment date and remaining contract term," the spokesman said. "It is only the way monthly repayment amount is calculated that will change."
Loan restructuring and rising rates are a response to increased hedging and funding costs, according to bank analysts.
Banks' costs from wholesale funding have been rising this year as a result of global volatility.
Commonwealth Bank, Westpac, National Australia Bank and ANZ Bank have all increased interest rates for business borrowers in recent months in response to higher funding costs and tighter regulation.
