There are some significant changes to Australia’s banking system currently happening.
I felt it was important that you are aware of this, as it’s likely to impact on all Australian mortgage holders.
Since the GFC, the global banking industry has been working on reducing the risks within banking systems. One of the key “de-risking” decisions is a requirement for lenders (authorised deposit-taking institutions) to hold more money (capital) in reserve by the 1st of July 2016.
This higher reserve level is designed to make our banks stronger and safer. However, with strength comes additional cost, which will eventually be passed on to customers and shareholders.
Today, I received news from one of Australia’s major banks that their home loan and investment loan rates will increase by 0.20% for all existing mortgage holders. The reason for this increase is “to meet these new rules, including the significant amount of capital that we must now hold against residential mortgages”.
The lender who has made this first bold move is Westpac. Will other lenders follow?
Every authorised deposit-taking institution will have to adjust to these requirements in different ways. Interest rates and fees are going to be relatively volatile.
I am here to help guide you on options in light of these changes. My recommendation is that you please contact me for advice before you make any decisions in response to this information.
Jason Thomson | Mortgage Adviser and Finance Broker | Smartline Cairns