Australia & New Zealand Banking Group Ltd. is raising the mortgage rate for landlords, the first major Australian lender to do so amid a regulatory crackdown to temper soaring home prices.
The country’s fourth-largest mortgage lender will increase its variable rate by 27 basis points to 5.65 percent and fixed rate by 30 basis points from Aug. 10, it said in a statement Thursday. This is the first time since 1997 that owner-occupiers will get better rates than investors, Melbourne-based spokesman Stephen Ries said by phone.
ANZ’s move is the latest in a series of steps by lenders after a 43 percent surge in Sydney’s home prices since May 2012 fueled concerns of a property bubble. Banks have also removed interest-rate discounts on home loans to investors and this month lowered the amount they can borrow relative to the value of the property.
“The decision to raise interest rates for residential investment lending has been difficult but necessary,” Mark Whelan, the chief executive officer of ANZ’s Australian unit, said in the statement. “This is a considered decision that takes into account our customers’ position and the criteria we look at when setting rates including our competitive position, our regulatory obligations and the state of the residential property market.”
A 27 basis-point increase in ANZ’s variable rate will raise monthly principal and interest repayments on a 30-year, A$500,000 ($368,000) mortgage by about A$85, according to a home-loan calculator on the bank’s website.
ANZ shares closed 1.2 percent lower on Thursday in Sydney, compared with a 0.4 percent drop for the benchmark S&P/ASX 200 Index.
Larger rivals Commonwealth Bank of Australia and Westpac Banking Corp. fell less than 0.4 percent. Spokesmen for the two banks said in separate e-mails the companies were always reviewing their interest rates.
The Reserve Bank of Australia said last year that investors -- who account for more than half of new mortgages issued by the nation’s lenders -- were distorting the housing market.
The Australian Prudential Regulation Authority in December urged lenders to limit investor home-loan growth to 10 percent a year. Record-low borrowing costs helped fuel a 35 percent surge in those loans at the four largest banks in the three years through May, APRA data show.
ANZ’s investor mortgages grew 10.6 percent to A$60.4 billion in the year to May, the data show. The bank’s rate increase may help it offset the increased cost of holding more capital against mortgages, after APRA this week raised the minimum requirements for Australia’s largest lenders.
As a result of the banks’ tightening steps, the value of new mortgages for investors fell 3.2 percent in May from April, the most since March 2012, government data showed July 10. Investors accounted for 52.5 percent of all mortgages approved in May, the highest proportion on record, the data show.
Floating rates for owner-occupiers won’t change while their fixed rates will drop by as much as 40 basis points, ANZ said.