The National Australia Bank (NAB) is raising interest rates for investor home loans.
In a statement released earlier today, the bank announced it will increase variable interest rates on interest-only home loans and line of credit facilities by 29 basis points, exceeding the 27 basis point increase announced by their competitors.
The NAB noted that in the past three years total housing loans grew by 27% across Australia’s banking sector. However, growth in housing investment loans and interest-only loans had been 34% and 44% respectively.
NAB group executive personal banking, Gavin Slater, said higher growth rates in investment and interest-only loans had implications from a regulatory, industry and banking standpoint.
“In considering these and a range of other factors, NAB is confident the steps we are taking are the right approach to further support responsible lending practices”, Slater said, adding that “in an environment of record low interest rates, NAB believes it is important to encourage our customers to pay down their home loan”.
As was the case with ANZ and CBA it appears APRA’s announcement late last year, that they were looking to restrict growth in home loan lending to investors down to 10% per annum, led to NAB’s decision.
Having seen growth rates to this segment continue to push higher in recent months, the regulator has now tightened the screws to achieve the outcome desired.
On Friday the RBA will release lending aggregates data for June, including for investment lending. All eyes will be on this data to see whether renewed growth for housing investment triggered this tougher response from APRA or if previous measures are already having an effect.