As expected, the Commonwealth Bank is today the second bank to hike interest rates out of cycle, notching rates up 15 basis points. ANZ and NAB are expected to follow.
As did Westpac, the CBA blamed the rates decision on increased capital and regulatory requirements. (‘Banking regulator announces tighter capital adequacy requirements for residential mortgages’ – 21st July 2015)
On Monday, the government endorsed the banking regulator’s action in making the Australian banking system “unquestionably strong,” a recommendation from the Murray Financial System Inquiry.
Today Wayne Byres, chairman of Australia’s banking regulator – the Australian Prudential Regulation Authority, remarked some lending standards by the big banks were at “horribly low levels” and had lacked “common sense”. He said “With the benefit of hindsight, obviously we wish we got on to this a bit sooner, but we are where we are.”
It is also understood, Westpac has once again written to brokers informing them of a further crack down on loans to foreign property investors, effective next Monday. The bank will scrutinise visa and foreign-currency income, while abolishing low doc loans for immigrant mortgages. In July, the bank had written to brokers who were arranging a high percentage of mortgages to non-residents, informing them that applications must have an Australian residential address.
» Government backs APRA action on banks – The Sydney Morning Herald, 20th October 2015.
» Bank of Melbourne latest to crack down on foreign lending for property”> – The Australian Financial Review, 21st October 2015.
» Westpac tightens lending for foreign property investors – The Australia Financial Review, 26th July 2015.