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Home loan rates to rise up to 50bps, warns industry veteran

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Australian Broker | 07 Oct 2015, 07:37 AM Agree 0
Home loan rates could increase by a further 50 basis points, despite speculation of a Melbourne Cup day rate cut, one industry expert has warned
  • Richard Simmons | 07 Oct 2015, 09:51 AM Agree 0
    No problems with so called industry experts talking about where they see the interest rate cycle moving but this article has provided no factual basis or reasoning for the potential rate increases.

    The recent rate increases by most lenders were driven by APRA guidelines to reign in the rate of lending growth in those segments, and had far less to do with rising cost of funds. In fact, many lenders are commenting on being in a stronger position on lending margins than in comparison to the recent 2-3 years.

    Most lenders took the recent APRA situation as a chance to increase the rates on their existing loan books by 25 to 30 bps on investment or interest only lending purely to take the heat out of those segments, so that hardly creates immediate margin pressure does it.

    No problems with industry experts commenting on where they think the market is heading but headlines like "loan rates to rise by 50bps" really need to be seen for what they are, personal opinion.
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