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UPDATE 1-Australia's Westpac Banking raises rates for home buyers
March 17, 2017 / 3:57 AM / 8 months ago

UPDATE 1-Australia's Westpac Banking raises rates for home buyers

(Adds Westpac comment)

SYDNEY, March 17 (Reuters) - Australia’s Westpac Banking Corp said on Friday it will raise mortgage rates across a range of products including for owner occupiers, a day after rival National Australia Bank made a similar move.

Westpac will increase its variable home loan rate for owner occupiers by 3-8 basis points, it said in a statement. Variable rates for property investors will be raised by 23-28 basis points.

On Thursday, NAB became the first of the country’s Big Four lenders to raise mortgage rates, a move that in part will be welcomed by regulators desperate to cool runaway real estate prices.

Westpac said its decision was based on a “number of economic and regulatory factors.”

“Today’s changes are in response to increasing funding costs,” George Frazis, chief executive of Westpac Consumer Bank, said in the statement.

“Despite home loan interest rates being at historically low levels, both deposits and wholesale funding of mortgages have increased over the last nine months.”

On Wednesday, Commonwealth Bank of Australia, the nation’s largest mortgage provider, and subsidiary Bankwest said they will raise interest rates and toughen lending conditions for investment property buyers. It did not raise rates for owner occupiers.

Their decision comes at a time when the Reserve Bank of Australia kept its policy rate at 1.50 percent for an eighth straight month in March.

While the moves will likely help hose down the heat in the country’s red-hot housing market, economists say raising rates for owner occupiers, in particular, could have negative consequences for the A$1.7 trillion economy.

Data out on Thursday showed the country’s jobless rate was at a 13-month peak. Besides, household spending has been subdued amid record low wages growth.

Home prices in major cities jumped 11.7 percent in the year through February, while in Sydney they shot up 18.4 percent.

RBA Governor Philip Lowe recently devoted a lot of attention to the risks in Australian housing market, including the dangers of a debt-fuelled boom and bust. (Reporting by Swati Pandey; Editing by Muralikumar Anantharaman and Subhranshu Sahu)

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