Non-banks stealthily increase fixed rates

by Miklos Bolza17 Nov 2016
A number of non-bank lenders have discreetly raised their fixed rate mortgages by up to 45 basis points for owner-occupiers and investors, reports the Australian Financial Review.
 
Australia’s biggest non-bank, Firstmac, has raised one to three-year rates on its owner-occupied and investor loans by up to 13 basis points to 4.09% and 4.34% respectively.
 
“The increase was prompted by increased swap rates which affect our funding costs,” A Firstmac spokesperson told Australian Broker.
 
Since mid-September this year, three-year swap rates have risen from 1.69% to 2.00% while five-year swap rates increased from 1.97% to 2.44%, the spokesperson said.
 
“This has also driven increases from numerous other lenders and more are probably in the pipeline. That means that borrowers who plan to opt for fixed rates down the track would do well to instead lock them in at the time of application so they don’t get caught if swap rates continue to rise and their lender is forced to raise fixed rates.”
 
Talking with Australian Broker, Bank of Queensland’s group executive product & strategy Vimpi Juneja said that while the bank had not increased its carded three-year fixed interest rate of 4.29% for owner-occupied and investment loans, it had reduced the discount on current campaign rates by 20 basis points, effective 16 November.
 
“This campaign is for new to bank lending that meets certain eligibility criteria,” Juneja said. “The campaign has been running for around 12 months, and we have both increased and decreased the discount applied throughout that time.”
 
The bank is offering updated discounts of 0.50% for owner-occupiers and 0.30% for investors, putting the new campaign rates at 3.79% and 3.99% respectively.
 
“Campaign rates do not run for an indefinite period of time. Like all banks, we need to constantly monitor our portfolio and pricing to ensure we get the balance right between sustainable growth over the longer term as well as risk and margins.”
 
Other lenders with higher fixed rates include WA-based P&N Bank which increased rates on its fixed two, four and five-year principal and interest loans as well as its interest-only products by up to 10 basis points.

“Similar to many other lenders, we've increased rates on our fixed rate book due to the rising cost of funds, an upward trend in swap rates and the need to monitor our capital requirements,” Sean FitzGerald, P&N Bank's general manager of retail banking and distribution told Australian Broker.
 
The Firstmac-owned loans.com.au also raised its one, two and three-year fixed rates by up to 13 basis points to 3.89% for both investor and owner-occupied loans.
 
Finally, Illawarra Credit Union has raised its range of fixed rates by 10 to 45 basis points, Catalyst Money has increased its fixed rates by up to 30 basis points, and Beyond Bank has pushed them up by 10 basis points.
 
Related stories:
 
Are borrowers shunning fixed rate loans?
 
Big four may increase mortgage repayments
 
Lender unveils newly discounted variable rates

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