There is some bad news coming for home loan customers. A rise in the interest rate of their loans is imminent now, due to the Bank of Queensland, which has recently surprised almost every Australian with a considerable increase in mortgage rates.
Just the beginning of interest rate increase
On April 6, the Bank of Queensland has raised the mortgage rates for both occupiers and investors, even though the Reserve Bank of Australia aimed to keep the cash rates on hold, at only two per cent.
The percentage of the increase is undoubtedly not a small one, as the variable rates are getting higher with 25 basis points for investors and 12 basis points for owner occupiers. The rise started on April 15.
Some simple calculations reveal that many Australians who have a home loan from the Bank of Queensland will have to pay a variable rate which has been raised by 5.14 per cent for investors, and 4.72 per cent for owner occupiers.
According to Australian finance experts, not only the clients of the Bank of Queensland should be worried but many home loan buyers. They affirm that such a dramatic increase will impact the market no matter their lenders because the decision made by the Bank of Queensland could influence competing banks. The Reserve Bank of Australia has not announced if it will move the cash rate or not after the increase of the interest rate. Thus the specialists sustain that whatever the RBA’s decision is, it will count too little for the rise in interest rate, which may be imminent for all lenders.
Was the increase a surprise for the experts?
Financial specialists such as John Kolenda – the director of 1300 home loan, consider that a rise in interest rate is not a surprising aspect especially because of the new requirements of the Australian Prudential and Regulation Authority (APRA) which are harder to meet. The lenders also need money for funding some issues that are not at all inexpensive.
“No home loan customer is safe. Because all the banks and lenders have similar challenges, an increase in the interest rate may be the right – or the only – solution.”John Kolenda
Striving to meet the high requirements necessitates funding so a rise in interest rate is not a surprise. The percentage may be a surprising aspect but the experts expected the increase itself. In fact, this is one of the reasons claimed by the chief executive officer of the Bank of Queensland, Jon Sutton, aside from the incredibly competitive market.