We recently wrote regarding significant changes in the Australian residential investment loan market over the past couple of months. This intervention by APRA (Financial System Regulator) sparked the beginning of a process for Australian Lenders to not only reduce the volume of investment lending, but just as importantly, to bolster the amount of capital Lenders hold in their balance sheets to ensure we have a stronger financial system.
The first round of capital raising for several lending institutions was achieved by issuing more shares to investors. On 14th October 2015 Westpac announced an increase of 0.20% to home loan interest rates, which was outside of any Reserve Bank movements. The increase in capital requirements by APRA is one of the core reasons for this increase.
Other lenders may stall this process however, we feel it is only a matter of time before all mainstream Lenders increase home loan and investment loan interest rates in the very near future. This will likely unfold in the next few weeks.
What should I do?
As we mentioned in our previous posts, our recommendation is not to make any quick decisions, as any potential refinance could end up costing more. Instead, should you wish to discuss your loan please feel free to contact us by email or phone (03) 9882 2500 so we can discuss your individual financial position.