The Bank of Queensland has joined an ever-growing list of banks who are lifting rates and tightening access to loans for property investors, as Australian lenders look to curb rampant property investor lending growth and surging house prices.
The regional lender today said it was lifting rates on its residential investment loans by 0.29 per cent from August 10, but held fire on changes to its fixed term products and owner-occupier loans.
The lender also said it was upping the risk requirements across its financial products, strengthening deposit requirements and slapping tighter controls on variations to standard rates for resident investors.
The changes are designed to balance the bank's growth plans with regulatory requirements, after the Australian Prudential Regulatory Authority imposed a 10 per cent speed limit on investor lending portfolio growth on lenders.
“We are adopting a prudent position," BoQ executive for retail banking Matt Baxy said in a statement today. "While we do have capacity to grow, we need do so in the right way and the changes announced today reflect that balance."
The bank has about $11.1 billion worth of investor loans on its books, just under the $14.2bn worth of loans for owner-occupiers it holds, according to the latest APRA figures.
The monthly APRA figures showed investor lending across Australia's deposit taking institutions grew at a rate of around 11 per cent in the year to June.
BoQ is the latest institution to raise rates or tighten access to its loans for investors, amid concerns of a speculative property bubble in Australia's residential property market which RP Data said today was worth $6 trillion.
RP's latest figures show house prices have increased 11.1 per cent over the last year, with Sydney prices growing at the fastest pace for 13 years, at 18.4 per cent.
Record-low interest rates have fuelled bubble-like conditions in the capital city housing markets. The Reserve Bank of Australia has trimmed the official cash rate twice this year, to its lowest ever level of 2 per cent, in a bid to stimulate a sluggish economy in its transition away from the mining boom.
The big four banks have all recently raised interest rates for new and existing loans, while AMP Bank, Suncorp and ING Direct have hiked investor rates by as much as 0.3 per cent. AMP went as far as announcing a freeze on all new loans too, in a bid to bring its investor growth rate down, which currently sits near 14 per cent a year.
Of the big banks, NAB's investor portfolio is growing the fastest, at a rate of around 14 per cent over the last year. ANZ is next at 12 per cent, while CBA and Westpac are growing at around 10 per cent, according to Deutsche Bank research.
The rate hikes will have investors up in arms, but provide a major boon for the lenders' bottom lines. Analysts figure the big banks will see an earnings lift of between 1 and 3 per cent, while smaller lenders will increase their earnings by as much as 5 per cent.
Bank of Queensland closed down 0.29 per cent to $13.71.