Lender passes raising costs to customers

by Madison Utley08 Mar 2019

Weeks after posting a 97% drop in profits, a wealth management company has announced changes to its home loan offerings.

In the next few days, AMP Bank plans to decrease a range of fixed rate loan options as well as increase variable rates.

“We have held off passing this cost on to existing customers for as long as we can. We are managing our loan portfolio in a very active market and decisions on rates are never taken lightly,” said AMP chief executive Sally Bruce.

When the bank shared its financial results in mid-February, it attributed its 2018 earnings being less than the year before to several factors, including higher cash outflows and the ongoing impact of the royal commission.

Now, variable lending rates for new and existing owner occupiers and investors will increase by 0.15% p.a.

“The change in variable rates is driven by an increase in costs,” said Bruce.

The bank also announced two new fixed lending offers: the three-year package investment P&I at 3.99% per year, and the five-year package owner occupied P&I at 4.05%.

AMP clarified that the two-year fixed rate of 3.75% for owner occupied principal and interest customers will continue to be offered.

The rate changes go into effect on 8 March for new business and 11 March for existing business.