Bendigo and Adelaide Bank is raising rates on interest-only mortgages, following similar moves by the major lenders.
The regional lender will raise variable interest rates by 0.3 per cent for its existing interest-only owner-occupier customers, and by 0.4 per cent for its interest-only investors, effective July 14.
The hit is harder for Bendigo's new business customers seeking interest-only variable rates, who will find increases up to 80 basis points, or 0.8 per cent with fixed interest-only rates increasing by 0.1 per cent to 0.4 per cent.
Bendigo's new business investment principal and interest variable rates will go down by 0.15 per cent with fixed P&I interest rates decreasing by up to 0.30 per cent.
The decision comes as the Reserve Bank held its benchmark interest rate at the record low of 1.5 per cent for the eleventh straight month.
A recent string of independent hikes on interest-only mortgages and on investor loans by major banks follows the prudential regulator in March moving to limit the share of new interest-only lending to 30 per cent of loan approvals.
Bendigo and Adelaide Bank is the latest of the major lenders to respond by encouraging interest-only customers to shift to other products with a rate hike.
By imposing higher borrowing costs on investors and owner-occupiers with interest-only home loans, Bendigo is moving in the wake of the big four lenders, most recently the Commonwealth Bank
CBA's interest-only home loan customers will see their rates rise by 30 basis points - or 0.3 percentage points - from this Friday.
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