Australia’s sixth largest lender is lifting its variable rates for the second time in less than six months.
The changes at Suncorp will see all variable rate home loans increase 0.17% p.a. and small business loans increase 0.10% p.a, effective 14 September.
This follows on from its 28 March rate hike of up to 0.12%.
The hike comes two days after Australia’s second biggest bank, Westpac, hiked rates for their variable customers.
Adelaide Bank has also chosen to follow in Westpac’s wake, hiking rates today by up to 0.40%.
Suncorp Banking & Wealth CEO David Carter said the decision to increase rates was based on the sustained increase in funding costs.
He added, “In March we acknowledged the increase in the Bank Bill Swap Rate (BBSW), which has continued to rise. This has benefited customers who have their money in savings accounts, with our term deposit rates up over 0.20% on average.
“This has also driven demand for our high interest savings products, such as our Growth Saver account. 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.
“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. This means the gap between the cash rate and BBSW is likely to remain elevated for longer than we predicted six months ago.”
Commercial and agribusiness customers are not impacted by the changes announced today, however their rates are linked to BBSW and therefore they are already experiencing the impact of rising wholesale rates.
Carter said, “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.
“We’re committed to reviewing home loan rates, should there be a sustained improvement in funding costs."
RateCity research director Sally Tindall said the banks were fighting each other to get their rate hike releases out the door.
She said, “Westpac was always going to be a trigger for other banks. Today, the floodgates are well and truly open.
“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."