Australia's biggest lender to landlords has hiked interest rates for investors to meet the regulator's "speed limit" aimed at taking some of the heat out of the housing investment market.
Westpac is the last of the big four banks to raise rates for investors, matching ANZ and Commonwealth Bank's 27 basis point hike in its standard variable rate.
Westpac consumer bank chief executive George Frazis said the move was an important step in ensuring the bank met the Australian Prudential Regulation Authority's benchmark that investor credit growth should be no more than 10 per cent per year.
"We have already introduced a range of initiatives, including increasing the deposit required for investment property loans to 20 per cent, as part of our commitment in meeting APRA's benchmark," he said on Friday.
APRA's June banking statistics show Westpac was the only one of the big four banks to come within the 10 per cent speed limit.
Reserve Bank of Australia private sector credit data for June, also released on Friday, showed annual growth in credit for investor housing accelerated to 10.7 per cent, the strongest pace in seven years.
"While the pace of credit growth for investor housing is above APRA's comfort levels, recent market activity should see the pace of growth come off the boil," St George chief economist Hans Kunnen said.
Many lenders have hiked interest rates for investors while also making it harder for them to get loans.
"The impacts of these measures may begin to become apparent in the credit data from around October, given a one to two month lag from finance approvals," Westpac senior economist Andrew Hanlan said.
ANZ economists noted the June credit data incorporated the tightening of investor lending criteria announced by lenders in May but pre-dated the increases to investor lending rates, which were expected to dampen investor lending growth in the coming months."
Westpac was the last major bank to move because its systems had prevented it from increasing the standard variable interest rate for investment loans without also impacting owner occupiers.
Its variable rate for new investors will take effect on August 10 and for existing customers on September 25, which the bank said would ensure there was a smooth transition to the differentiated rates structure for the mortgage portfolio.
Westpac's fixed rates for housing investors will rise by up to 30 basis points but will fall by the same amount for owner occupiers from next week and also apply to its Bank of Melbourne brand.
Bank of Melbourne's standard variable interest rate for residential investors will rise by 25 basis points.
National Australia Bank hiked variable rates on interest-only home loans - the predominant structure for investors - by 29 basis points.
SOME OF THE BANKS' YEAR-ON-YEAR HOUSING INVESTMENT LENDING GROWTH
* ANZ up 12.02 pct to $83.508 bln
* Commonwealth Bank up 10.23 pct to $129.719 bln
* NAB up 13.96 pct to $66.637 bln
* Westpac up 9.9 pct to $152.499 bln
* AMP up 13.76 pct to $2.985 bln
- AMP has temporarily ceased new investor property loans
* Macquarie up 81.57 pct to $9.017 bln
- That was largely due to it acquiring loan books from other institutions, comparison website Finder.com.au said.
Source: APRA.
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