Jan. 4 (Bloomberg) — National Australia Bank Ltd. and
Australia %26amp; New Zealand Banking Group Ltd. raised interest rates
on mortgages to recoup higher funding costs, the first time in
more than a decade that some of the nations biggest lenders
changed home loan rates without any action from the central bank.
National Australia, the countrys second-biggest provider of
mortgages, raised its variable rate for home loans by 12 basis
points to 8.69 percent, according to the Melbourne-based companys
Web site. ANZ boosted charges for some loans by a quarter point.
Australian banks had raised borrowing charges in November
when the central bank increased its key rate by a quarter of a
percentage point, or 25 basis points. That added A$42 a month to
repayments on an average A$250,000 ($220,000) home loan in a
nation where households already carry record debt of 161 percent
of disposable income.
“Its just a matter of time before the other banks follow
suit, whether or not the central bank increases its own rate,
said Shane Oliver, who helps manage the equivalent of $113 billion
at AMP Capital Investors in Sydney. “Ive been surprised they
have managed to hold off as long as they have given how much their
funding costs have increased from the debt crisis.
ANZ, which funds 40 percent of its assets from the wholesale
debt market, raised the borrowing charge for some of its products
by 25 basis points to 8.44 percent and 8.54 percent, Paul Edwards,
the banks spokesman, said in a statement e-mailed to Bloomberg.
The increase applies to new fixed home loans starting Jan. 7. ANZ
left its charge for variable-rate mortgages unchanged.
Swap Rate
The nations one-month bank bill swap rate, which banks use
to determine yields on variable-rate loans, reached an 11-year
high of 7.37 percent on Dec. 14.
Commonwealth Bank of Australia, the nations second biggest,
is reviewing its interest charges, Bryan Fitzgerald, the Sydney-
based banks spokesman, said. Commonwealth in November initially
signaled it may raise rates. Westpac Banking Corp. is reviewing
its charges, spokesman David Lording said.
The Reserve Bank of Australias November increase took its
benchmark rate to an 11-year high 6.75 percent on concern the
economys expansion threatens to stoke inflation. About 80 percent
of mortgages in Australia are variable-rate loans, which typically
move in lock-step with central bank increases.
This is the first time banks have changed their interest rate
independently of the central bank since they cut in February 1997,
according to data on the central banks Web site.
“The move by National Australia and other banks amounts to a
de-facto monetary tightening and will help head off another
increase by the Reserve Bank of Australia, Oliver said.
Lending Profits
National Australias net interest margin, which measures the
profitability of lending, narrowed 12 basis points to 2.45 percent
in the year through September while ANZs fell 5 basis points to
2.30 percent. Commonwealth Banks margin shrank 15 basis points to
2.19 percent in the six months ended June 30.
National Australias shares rose 1 percent to A$37.33 at the
close in Sydney. ANZ climbed 0.3 percent to A$27.41 and
Commonwealth gained 0.5 percent to A$58.04.
Wayne Swan, Australias treasurer, said in an interview on
his Web site that banks have waited as long as they can before
passing on higher borrowing costs.
“The nation cannot necessarily avoid the fallout of the
subprime crisis in the U.S., he said.
Australian housing affordability will deteriorate in 2008
amid higher borrowing costs and rising property prices, the Real
Estate Institute of Australia said today.
Challenges facing the residential real estate market include
low home-loan affordability, the possibility of more interest-rate
increases and “ongoing fallout from the U.S. subprime problems,
the institute said in an annual outlook released today in Sydney.
Australians spent almost 37 percent of their family income to
pay an average home loan in September, the largest proportion
since the institute began measuring affordability 22 years ago,
todays report said.
To contact the reporter for this story:
Stuart Kelly in Sydney
