Australia appears to be headed for another round of out-of-cycle rate rises, with the Bank of Queensland being the first bank to hike rates by 0.25% for investor clients.
Chief executive Jon Sutton attributed the move to prioritising “growth, risk and margins over the long term", but recent comments by regulators suggest that more banks will be pushed to increase rates.
“Our consideration of what constitutes ‘unquestionably strong", APRA Chairman Wayne Byres told delegates at the recent Australian Financial Review summit; “the direction is pretty clear – no one should be planning for capital requirements to decline.”
When APRA raised capital requirements for major banks last year, it resulted in rate rises for new and existing customers.
With investor clients heavily reliant on the broker channel for dealing with lenders, investors are at risk of being left in the dark about rate rises due to poor communication between brokers and lenders.
In a recent survey of brokers by MPA magazine, 65% of brokers said the banks hadn’t dealt with 2015’s APRA changes in a ‘fair way for new and existing customers’.
Many blamed the major banks for raising rates without warning, causing panic and confusion amongst their clients.
However brokers may also have to shoulder some of the blame. Banks say they are communicating changes through their personnel and newsletters, and some, such as NAB Broker, took the decision to send letters directly to customers informing them of changes.
Yet this move was deeply unpopular with some brokers, who saw NAB undermining their relationship with the customer.
Whether brokers, who generally have limited back office resources, can really deal with all bank-customer communication remains doubtful.
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