October 15, 2015
In a move that has surprised many Australians, Westpac has announced it will increase its variable owner occupied and residential investment property loan rates by 20 basis points, effective 20 November 2015.
The decision comes just weeks after the Australian Prudential Regulation Authority (APRA) announced that the big four banks would need to increase their risk weighting for home loans and, in turn, carry more capital against their mortgages.
While the move may come as a surprise to some customers, Westpac’s decision to lift its interest rates is not altogether ‘surprising’.
One of the most effective ways for the big four banks and Macquarie to carry more capital against their mortgages is by lifting the interest rates across their suite of home loan products, which is exactly what Westpac has done.
With that in mind, we would not be surprised to see the other major lenders follow suit and increase their interest rates in the future as they look to carry more capital against their mortgages.
But while Westpac’s decision to increase the interest rates across its suite of owner occupied and investment home loans may encourage other majors to do the same, it’s as important to remember that rates continue to sit at near record lows. Even if the majors all lift their interest rates by 20 basis points, interest rates continue to sit at 50 and 60-year lows.
Now is still a good time to be a home owner and home buyer because interest rates are still incredibly low by historical standards.
If you are concerned about how Westpac’s decision may impact you and your mortgage, now is the perfect time to give your home loan a health check and make sure you are still in the right product for your needs.
If you would like learn more about your home loan or financial advice options, call us on 03 8602 6777.