Westpac’s move has fuelled speculation about another possible interest rate cut by the Reserve Bank.
Advertisement
It urged regulators to take aim at investment loans and to raise the capital buffer banks needed to cover this group.
NATIONAL Australia Bank boss Andrew Thorburn says the banking giant’s mortgage rates are under review after Westpac moved to lift owner occupier home loan rates.
A major Australian bank has hit investors and owner occupiers with another interest rate rise as it responds to regulatory requirements that have increased the cost of providing mortgages.
“While Westpac is well placed to meet these changes, a significant increase in capital ultimately increases the cost of providing home loans to customers”, Westpac’s consumer bank chief executive, George Frazis, said.
Depositors, on the other hand, will receive a 25 basis point increase on selected new term deposits, effective from 16 October.
“This is a hard decision and one that is not taken lightly”.
Lowering the cash rate to a fresh record low in November would be an easy decision for the RBA, given the risk of a higher Australian dollar, weakening population growth and potential further delay in the US Federal Reserve’s rates liftoff, he said.
In August, ANZ announced a $3 billion raising while CBA opted for $5 billion.
Ms O’Dwyer told reporters in Canberra the government would have more to say on capital adequacy when its response to the financial system inquiry, chaired by former banker David Murray, is made public.
The selling season has already begun to show signs of slowing, hindered by news of a prospective price bust in 2016, commentary of banks’ over-exposure to the property market and the shadow of the Australian Prudential Regulation Authority’s restrictions on investors.
Westpac announced cash profits of 3 per cent this year, to $7.82 billion.
Westpac’s one-for-23 renounceable entitlement offer will comprise of an institutional and retail portion.
The lender said the announcement brought the total amount of capital it has raised this year in direct response to regulatory changes to around $6bn. Westpac estimated its move would cost A$10 a week for the average borrower.
Advertisement
“The major banks account for about 80 per cent of mortgages, so 80 per cent of those with a mortgage would have seen their rate go up”, he said.
