Rate rise for property investors
28 July 2015 by News Desk
The National Australia Bank is to raise variable mortgage rates on interest-only loans in a bid to cool the housing market.
NAB will increase its rates by 29 basis points, and it follows moves by ANZ and Commonwealth Bank of Australia who both increased, by 27 points, rates on loans for property bought for investment purposes.
The NAB rate hike will also apply to owner occupiers with interest only loans and it will add around $70 to the monthly cost of a $300,000 interest-only mortgage.
Interest-only loans are the main vehicle for investors and over the past three years there’s been a rise of 34% in loans for housing investments while the number of interest-only loans has risen by 44%.
In a bid to cool the rising housing markets in Sydney and Melbourne, the Australian Prudential Regulatory Authority (APRA) has urged banks to keep annual growth in investment home loans to below 10%.
NAB’s interest-only rate changes will come into effect on Aug 10 for new loans, while the change in existing interest-only variable rate loans will come into force on Sept 10. NAB’s new investment home loan variable rate of 5.72% remains 0.18% lower than the rate six months ago.
