AMP raises variable rates on mortgages

AMP has lifted variable mortgage rates for both owneroccupiers and investors, following rival lenders in a move that could put further pressure on the housing market.

The lender, which this year lost its top bosses and a third of its market capitalisation following its mauling at the banking royal commission, is raising rates by between 0.08 and 0.17 percentage points.

The move, which comes despite the Reserve Bank cash rate sitting at a record low since August 2016, follows similar hikes by lenders including Macquarie and Bank of Queensland.

AMP Bank group executive Sally Bruce said the increases were AMP’s first since June 2017, and that they were driven by an increase in funding costs. “We are managing our portfolio in a very active market and our decisions on rates are never taken lightly,” Ms Bruce said.

“We have held off passing this cost on to customers for as long as we can.” Owner-occupied principal-and-interest loans will go up this month by 0.08 percentage points, with owner-occupied interest-only and all investment loans rising by 0.17.

JPMorgan Asset Management global market strategist Kerry Craig this week said the rise in short-term funding costs was likely to be a structural shift resulting from factors including higher US costs and credit growth rising faster than of deposits.

CoreLogic this week said Sydney home values had fallen 4.7 per cent in the past year, with the national average down 1.9 per cent over the period.