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ANZ joins rivals in hiking interest rates

AAP logoAAP 9/12/2016 Prashant Mehra

ANZ will increase rates on some types of mortgages from next week, becoming the last of the four major lenders to lift home loan rates in recent weeks despite interest rates remaining at a record low.

ANZ will lift variable rates on investor home loans by 0.08 percentage points to 5.60 per cent, in response to rising funding costs and changing market conditions

There will be no change in variable rates for owner-occupier home loans. Fixed rates for both investors and owner occupiers also remain unchanged.

"Despite residential investor rates remaining at historic low levels, this was a difficult decision that took into account increases in our funding costs and our regulatory obligation to manage a balanced portfolio," ANZ Australia group executive Fred Ohlsson said.

ANZ's decision puts it on par with other major lenders, who have all cited pressure on margins to justify the move.

National Australia Bank will increase variable rates on investor home loans by 0.15 percentage points from next week, while Westpac lifted its variable rates for all interest-only mortgages by eight basis points.

Commonwealth Bank increased interest rates on fixed-rate owner-occupier and investor loans last week.

Smaller rival ING Direct is also increasing variable rates on both investor and owner-occupier home loans by 0.15 per cent, effective December 12.

Lenders have looked to offset pressure on net interest margins - the difference between what banks pay to borrow funds and what they earn from customers - amid a low-rate environment.

Raising rates for investor loans, and for interest-only loans favoured by investors, also helps banks comply with APRA's rule that caps growth in investor lending by 10 per cent per annum.

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