ANZ is raising variable rates on its interest-only mortgages by another 0.
3 percentage points as it reins in riskier lending in response to regulatory changes.
And the lender further increased incentives for customers to shift away from interest-only mortgages by announcing it will cut variable rates on principal and interest home loans by 0.05 percentage points and scrap fees for switching.
The moves announced Friday apply to both residential and investor mortgages from June 16.
“While we know those only paying interest on their loans will be disappointed, we need to manage our regulatory obligations and we are now required to hold additional capital against our home loans,” ANZ group executive Australia Fred Ohlsson said.
In March, the Australian Prudential Regulation Authority told banks to limit higher risk interest-only loans to 30 per cent of new residential mortgages.
That prompted the big lenders to hike those rates to make loans less attractive in comparison to principal and interest loans, while increasing the amount of capital they generate.
The move appears to have worked, with a drop in investor lending driving a total 1.9 per cent seasonally adjusted fall in housing-related lending for April.
“This is no surprise given the combination of out of cycle rate hike largely aimed at investors and the introduction of additional macro prudential regulation by APRA in late March,” ANZ senior economist Jo Masters said.
“The data suggest those measures have had an immediate impact.”
ANZ already lifted its interest-only variable rate by 0.25 percentage points in March, and the following month hiked some of its fixed rates for interest-only borrowers by 0.4 percentage points.
ANZ said that more than 80 per cent of owner-occupier borrowers would benefit as its standard variable rate for owner occupiers comes down to 5.20 per cent.