The first bank interest rate increase of 2019 has occurred, thanks to increased funding costs and “intense competition”.
Bank of Queensland (BOQ) announced the changes, which will see rates go up by as much as 18 basis points from this Friday (11 January).
The Economy Owner Occupier Principal and Interest Rate is increasing by 11 basis points. A number of other home loans and lines of credit rates are increasing by 18 basis points.
While the changes affect several products, there is no change to BOQ’s Clear Path Owner Occupier Principal and Interest rates.
Lyn McGrath, group executive, retail banking said today’s announcement was a combination of a number of factors.
“Continuing funding cost pressures and intense competition for term deposits have contributed to this decision,” she said.
“While decisions like these are never easy, offsetting the impact of these costs ensures we balance the needs of our borrowers, depositors and shareholders.”
According to figures from RateCity.com.au, the new rate could see borrowers with a $500,000 paying more than $11,000 extra over the life of the loan.
RateCity.com.au research director Sally Tindall said with funding pressures affecting most banks, it was likely there would be further out of cycle rate increases.
Tindall added, “The banks have lost potential customers as a result of the falling property market and the tightening of serviceability requirements, both of which are also putting pressure on their bottom line.
“While banks are entitled to make a profit, some Bank of Queensland customers will be disappointed with today’s decision to increase interest rates.
“A lot of household budgets are feeling the pinch after Christmas. While most families will be able to absorb this hike, some may struggle to come up with the extra cash.”