Australia and New Zealand Banking Group (ASX: ANZ) has just announced that it is increasing variable interest rates for Australian home and residential investment loans by 0.16% per annum effective 27 September 2018.
ANZ joins Westpac Banking Corp (ASX: WBC) in raising interest rates. Westpac recently announced it was raising interest rates by 0.14% from 19 September 2018 despite intense scrutiny by regulators.
Two of the major banks have increased interest rates due to higher funding costs from overseas wholesale markets, an issue we raised a few months ago in this article: Westpac & CBA Could Be Forced To Raise Interest Rates
Why Are Interest Rates Rising So Fast?
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The US Federal Reserve is steadily raising interest rates and this is increasing funding costs for every borrower of US dollars, including Australian banks.
ANZ did try to win a few brownie points by saying that there will be no change to effective rates for home loan customers in drought-declared regional areas of New South Wales and Queensland.
“This was a difficult decision given we know the impact rising interest rates have on family budgets,” The ANZ Group Executive of Australia, Fred Ohlsson, said.
“The reality is it is more expensive for us to fund our home loans on wholesale markets and we also needed to balance the needs of all stakeholders.”
Investors and property owners will now look to National Australia Bank Ltd (ASX: NAB), as it is expected it will now also increase interest rates.
For homeowners, it seems like there’s never been a better time to shop around.
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