BOQ raises rates on existing investor loans

Bank of Queensland has increased its standard variable rate... Rate gap between investors and owner-occupiers to widen... Reserve Bank likely to leave rates alone

BOQ raises rates on existing investor loans
BOQ raises rates on existing investor loans 
Bank of Queensland has increased its standard variable rate up 0.29 per cent, effective August 10, joining the big four banks in the investor rate climb along with Suncorp, ING Direct and AMP.

The bank has raised rates on its existing loans, with most of its new loans will remain at their current rates, according to an article in The Australian Financial Review.

The change will see BOQ's standard variable investment housing rate increase from 5.56 per cent to 5.85 per cent, the AFR reports.

BOQ head of retail banking Matt Baxby said in a statement, "We are adopting a prudent position that is aligned with the market and balances our own growth objectives with the risks associated with investor lending in general and the overall growth of investor lending in market as a whole." 
 

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Rate gap between investors and owner-occupiers to widen
The growing interest rate gap between investors and owner-occupiers is expected to continue, according to an article in the Sydney Morning Herald. 

In the current climate, some banks have investor borrowers paying interest rates from 0.27 and 0.6 percentage points higher than those charged to owner-occupiers, with mortgage brokers predicting the gap may widen in the coming months, the article reports. 

Managing director of mortgage broker Homeloanexperts.com.au Otto Dargan was quoted saying,"The interest rates for most investor loans are likely to be 0.4 percentage points to 0.9 percentage higher than rates for owner occupied loans by the end of this year."

Principal of consultancy Digital Finance Analytics Martin North told the newspaper, "My expectation would be you could see a 70 to 80 basis point gap between owner-occupier and investor as we move forward into the next year."

Some are of a different opinion, with a spokeswoman for Mortgage Choice saying they do not expect the rate gap to increase further between investors and owner-occupiers but they do expect to see further tightening of banks' credit policies.
 

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Reserve Bank likely to leave rates alone
The Reserve Bank will reveal today whether expectations were correct and if it will leave rates on hold or not. 

The 16 economists surveyed by the AAP are in agreement that the cash rate will remain unchanged for August, according to an article in the Australian.  

Although commodity prices are falling along with China's share markets, these are not expected to be enough for the Reserve Bank to justify another cut today, The Australian reports.

"Iron ore is a little lower, China's a bit more volatile, but there's really not much a rate cut can do about all that," TD Securities chief Asia-Pacific macro strategist Annette Beacher told the newspaper.

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