interest rates

Banks increase rates on interest-only residential mortgages, cuts others

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Banks have recently increased interest rates for home loan customers who only pay interest. The National Australia Bank has also cut rates by a smaller amount for customers paying down debt on a residential property they live in.

NAB increased rates on interest-only loans by 0.35% points for both property investors and owner-occupiers. Westpac increased 0.34% points this week while ANZ raised 0.3% for the same customers two weeks ago. NAB also cut 0.08% points for owner-occupiers with principal and interest loans to discourage people from interest-only loans.

Banks have recently charged people with interest-only loans a higher premiums, following APRA’s new cap for this type of loan. According to NAB, they have to comply with the regulatory requirements such as APRA’s 30% limit on new interest-only loans for residential mortgages but also have to balance the needs of customers across their portfolio and provide competitive rates.

The Commonwealth Bank is the only major lender which has not increased its variable home loan interest rates this December but it is expected to make similar changes to its competitors as well.

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