Bendigo Bank is increasing its residential mortgage variable interest rate by 10 basis points to 5.48% for owner occupier loans.
It is the first to move rates upward for residential home loans, blaming the rising cost of funding.
Investor loans have been rising with the ANZ today, becoming the last of the big four banks to increase its variable loan for property investors by 8 basis points to 5.6%.
The Bendigo and Adelaide Bank also lifted investor loans by 10 basis points to 5.76%.
Managing director Mike Hirst says recent ultra-competitive mortgage pricing is unsustainable.
“The cost of funding these loans through both retail deposits and wholesale term debt is rising. Global financial markets have been volatile and this is impacting the cost of raising funds domestically as competition for stable deposits increases,” says Hirst.
“Even after this change, the vast majority of our borrowers pay well below the standard residential mortgage variable interest rate, and at rates which are a far cry from the 7.8% interest rates seen in November 2010.
“When setting these rates we’ve tried to carefully balance the interests of these mortgage customers, those who earn money through deposits and those who invest in our Bank.”
Customers on a residential owner occupied variable interest rate with a $250,000 loan will see their repayments increase by $15.63 a month (principal and interest home loan over 30 years).
The rise is effective December 15 for new and existing loans.