SYDNEY, March 29 Recent increases in home loan
rates by Australia's major banks should help cool growth in
lending to more vulnerable buyers, but banks still face risks
from high household debt and an overheated property sector,
Fitch Ratings said on Wednesday.
Australia's "Big Four" banks have all raised interest rates
on home loans for owner-occupiers and investors over the last
two weeks, even though the Reserve Bank of Australia has kept
the cash rate on hold at a record-low level.
Surging house prices have raised speculation that the main
watchdog, the Australian Prudential Regulation Authority (APRA),
is about to clamp down on bank lending to property investors,
adding to rules imposed in 2015.
Fitch said the out-of-cycle rate rises by the banks were
prompted by the potential action by APRA as well as higher
funding costs on the back of likely U.S. interest rate hikes.
Commonwealth Bank of Australia, Westpac Banking
Corp, Australia and New Zealand Banking Group
and National Australia Bank Ltd all have "stable"
AA-minus ratings from Fitch.
The ratings agency said risks remained due to high household
debt levels and "unsustainable" housing prices in Sydney and
Melbourne, placing pressure on affordability if lending rates
Deutsche Bank analysts on Monday increased their future cash
earnings forecasts for the banks by 2 to 3 percent due to the
mortgage rate hikes, even though they expected demand for loans
from housing investors to decrease as a result.
(Reporting by Jamie Freed; Editing by Richard Pullin)