Bank raises interest rate

BENDIGO and Adelaide Bank has hit some interestonly borrowers with rate hikes of up to 80 basis points.

Bendigo is the latest bank to jack up prices on interest-only loans as part of a sector-wide move to dampen demand for riskier mortgages.

The regional lender yesterday announced it was increasing variable rates on existing interest-only loans by 0.3 percentage points and by 0.4 percentage points on existing investor loans.

For new customers, interest-only loans will rise by between 0.4 and 0.8 percentage points. Fixed interest-only loan rates will rise by between 0.1 and 0.4 percentage points.

In late March, the Australian Prudential Regulation Authority told lenders to strictly limit interest-only loans to 30 per cent of new lending, and to maintain the 10 per cent annual growth limit on loans for investors.