Westpac recently raised their rates by 0.2% and I recently wrote an article predicting that the other banks would be following suit.
So it’s no surprise, but late last week, CBA announced that they have raised their rates by 0.15% and NAB has also announced that they have increased their rates by 0.17% as well!
These interest rate hikes will affect every loan across the board and will impact both investors and owner-occupiers.
The thing to remember here is that banks are running a business to the tune of billions of dollars.
When APRA changed it’s financial rules around investment lending, it put restrictions around how the banks would generate revenue. From a bank’s point of view, they needed to figure out a way to reclaim the lost revenue. Raising interest rates is the way that the banks would do it.
This move from the banks has been quite strategic, and it has forced the RBA – who meets next month – to reconsider raising interest rates. Chances are that they’ll hold off doing so for a while otherwise the banks will respond in kind. This would not be good for the retail sector especially over the Christmas period.
However, higher interest rates mean that it’s the perfect time to go shopping for the property investor – there’ll be a ton of deals out there, ripe for the picking!