Commonwealth, ANZ Bank lift mortgage rates

SYDNEY: Two more of Australia’s big banks have raised home loan rates, heaping additional pressure on indebted households.

Commonwealth Bank of Australia, the nation’s biggest mortgage lender, and Australia & New Zealand Banking Group Ltd (ANZ) both raised their key standard variable mortgage rate yesterday, joining Westpac Banking Corp, which was the first of the big four to move last week.

The move comes even as the central bank holds official interest rates at a record low and may squeeze borrowers already struggling with stagnant wages growth plus the highest levels of household debt among G-20 nations.

The out-of-cycle increase could also further deflate the housing market by deterring investors, who have already been hit by lending restrictions and a 11-month drop in prices.

ANZ’s standard variable rate for owner-occupiers would be increased by 16 basis points to 5.36%, the Melbourne-based bank said in a statement. Commonwealth Bank raised its key rate 15 basis points to 5.37%.

Short-term domestic funding costs reached a two-year high last quarter even as the central bank held its benchmark rate at 1.5%.

Australian lenders, which are reliant on offshore borrowing to fund their loan books, are also facing elevated costs overseas as the US Federal Reserve raises interest rates. — Bloomberg