Home News Lenders are hiking rates in response to higher compliance and funding costs

Lenders are hiking rates in response to higher compliance and funding costs

Font size :

Lenders are hiking rates in response to higher compliance and funding costs

The number of borrowers seeking refinancing has doubled to more than 30% as lenders increase rates and fees, as well as toughen scrutiny of income and expenses.

Mortgage brokers told The Australian Financial Review that numerous lenders are “throttling back” amid growing pressure from regulators and fear of exposure by the Hayne-led Royal Commission.

Lenders, including ME Bank and MyState, are hiking their lending rates in response to higher compliance and funding costs, with more expected to follow despite the Reserve Bank keeping the cash rate on hold for the 19th consecutive month.

Richard Holden, professor of economics at UNSW Business School, warns that loans could become harder to acquire as lenders respond to rising funding and regulatory pressures.

“I think that’s a definite possibility,” Holden told The Australian Financial Review. “The increased capital charges – at least for Commonwealth Bank of Australia – plus a general risk aversion on the part of executives seems likely to lead to further tightening of underwriting standards and a possible increase in loan spreads.  

“Wholesale funding costs are rising in the US, so I would look for a potential increase in rates here despite the RBA keeping the cash rate on hold. And I also think a general pull back in lending, which is already happening, will likely continue.”

MyState is the latest lender to raise rates by 20 basis points for all principal-and-interest loans above 80% LVR, as well as interest-only loans.

ME Bank, which is owned by 29 industry super funds, is raising rates for existing property borrowers by up to 16 basis points in response to rising funding and compliance costs.

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Mortgage News and Articles

Moody's: Housing market to remain chilly for the rest of the year Moody's: Housing market to remain chilly for the rest of the year

Australia will likely erase the housing price growth it recorded last year Read more

Darwin housing market likely to see recovery next year Darwin housing market likely to see recovery next year The city has been on a price downtrend since 2015 due to the end of the mining boom ... Read more

No dramatic correction expected for Melbourne No dramatic correction expected for Melbourne Experts say ANZ's prediction of a $1,000 price decline per week is "way over the top" ... Read more

Some Interest-only borrowers have no choice but to sell Some Interest-only borrowers have no choice but to sell They face higher repayments as loans roll into the principal plus interest ... Read more

More mortgage news and articles

Sponsored Links

Friday, Jun 22, 2018
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords