Two more banks hike rates
SUNCORP and Adelaide Bank have joined Westpac in raising interest rates.
The Brisbane-based lender announced a 17-basis-point increase to all variable rate home loans today and a 10-basis-point increase to all business loans from September 14. The bank had already jacked up rates by up to 12 basis points in March.
Meanwhile, Adelaide Bank will increase variable rates for investors and owner-occupiers paying principal and interest by 12 basis points. Interest-only loans will increase by 40 basis points for investors and 35 basis points for owner-occupiers.
"In March, we acknowledged the increase in the Bank Bill Swap Rate (BBSW), which has continued to rise," Suncorp boss David Carter said in a statement.
"While we have been absorbing this increase, the changes announced today are necessary to ensure our ongoing ability to support lending growth for home loan, small business and agribusiness customers.
"We acknowledge that any increase to rates will impact our home loan customers' cost of living, however our savings customers, many of whom are retirees, have been supported by favourable deposit rates over recent months."
Mr Carter said the bank was "committed to reviewing home loan rates, should there be a sustained improvement in funding costs".
"Since March we have also witnessed a change in the outlook for the RBA's cash rate, with movement now not expected until well into 2019," he said.
"This means the gap between the cash rate and BBSW is likely to remain elevated for longer than we predicted six months ago."
It comes after Westpac fired the starting gun on out-of-cycle rate hikes on Wednesday with a 14-basis-point increase, despite the Reserve Bank having left the official cash rate on hold for its longest period at the record low of 1.5 per cent.
Westpac blamed "higher wholesale funding costs" for the move. Smaller lenders have gradually been raising their rates for the same reason, but Westpac was the first of the Big Four to move.
CommBank, NAB and ANZ are widely expected to follow suit, although UBS analyst Jonathan Mott believes they may hold off for fear of retribution from Prime Minister Scott Morrison, who railed against the banks in his former role as Treasurer.
Mr Morrison called on Westpac yesterday to explain itself and urged customers to go elsewhere if they were unhappy.
"They have to justify, in this environment when people are really feeling it, why they believe they need to clip that ticket a little harder when people in Australia and their customers I think are doing it tough," he said.
RateCity research director Sally Tindall said Westpac was "always going to be a trigger for other banks".
"Today, the floodgates are well and truly open," she said in a statement.
"Suncorp customers will be miffed that they've been served up two hikes in less than six months. Meanwhile Adelaide Bank interest-only variable customers will be bruised by the fact their bank has delivered them one of the biggest out of cycle hikes so far.
"The message for Australian mortgage holders is now clear. Be prepared to shell out extra for your home loan or consider refinancing. Despite the hikes, banks are desperate to get new business in the door, throwing rock-bottom rates on the table, but only for new customers.
"If your bank has hiked rates and you own at least 20 per cent of your home, now could be the time to start shopping for a new home loan."