CBA and NAB moved standard variable interest rates higher for some customers ahead of official hikes, as analysts question mortgage profitability.
Commonwealth Bank and National Australia Bank have made out-of-cycle interest rate rises for some new customers, after analysts warned home loan profitability is under pressure from intense competition as lenders battle hard amid slumping property prices.known as the CBA Extra Home Loan, for new owner-occupiers and investors with deposits of 30 per cent or less.
Atlas Funds Management portfolio manager Hugh Dive said the move to increase rates was expected in response to the pressures facing banks.“They’re all facing higher wholesale funding costs and rising political pressures, so it’s not unexpected to have to increase rates a little bit,” Mr Dive said.APRA statistics showed that CBA continued to grow its share of mortgages faster than the market, at 1.2 times system growth, in the month of January.
National Australia Bank also moved out-of-cycle on Wednesday, raising rates for some new customers. Unlike CBA, NAB’s changes will only apply to customers with small deposits. The changes were notified in a market communication by RateCity, which monitors bank product pricing. Macquarie’s Lendi Mortgage Pricing Index released on Wednesday showed banks front book spreads were 0.8 of a percentage point below FY21 levels.offering existing customers a 1 percentage point discount to prevent them from switching lenders,The changes on Wednesday also show how banks are pricing mortgages differently, based on the level of equity borrowers have in a property – a dynamic known as “risk-based pricing”. For example, to get Westpac’s lowest variable rate loan of 4.
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