Westpac is the latest bank to increase interest rates for business customers and blame the move on higher funding costs, following similar changes from National Australia Bank and ANZ Bank.
Some of Westpac’s home loan customers will also face a rate increase as the bank is also increasing interest rates on lines of credit held against residential property.
The bank on Monday announced changes that will mean rates set in reference to a bill margin, which are commonly used by commercial customers, will increase by 0.23 of a percentage point.
Rates on various other types of business loans that are often used by smaller businesses, including overdrafts, will lift by 0.19 percentage points.
It is also increasing interest rates by 0.3 of percentage point on a range of business loans that it no longer offers to new customers.
Lines of credit — which allow customers to borrow against the equity they hold in their home — are also getting more expensive.
Rates on lines of credit will increase by 0.17 of a percentage point for customers with a Westpac-branded loan, and 0.15 of a percentage point for customers of St George.
The bank was lifting rates on business loans because of the lift in banks’ wholesale funding costs, and rules requiring banks to be better capitalised, a Westpac spokeswoman said.
“Business lending activity in our commercial and business banking division has experienced increased costs, including higher funding costs, which has impacted returns,” she said.
“While we have been disciplined in managing our margins, over the long term all businesses must deliver sustainable returns.”
Earlier this month ANZ raised various business interest rates by 0.21 of a percentage point, while it increased rates on lines of credit by 0.27 of a percentage point.
National Australia Bank, the biggest lender to business, kicked off this round of rate increases, when it raised interest rates by as much as 0.29 of a percentage point in early February. Commonwealth Bank has not raised business interest rates, a spokesman said.
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