AMP has followed the big banks and other smaller lenders by hiking its mortgage rates. 

Effective 3 April, AMP said variable interest-only rates would rise 15 basis points for owner-occupiers and 28 basis points for investors. 

Additionally, effective 31 March for new customers and 3 April for existing customers, owner-occupied principal-and-interest variable-rate loans will increase by 7 basis points. As a result, the AMP Bank Professional Pack owner-occupied variable-rate loan will increase to 3.92% for new customers for loans of $750,000 and above.

The Sydney-based bank is encouraging customers with interest-only loans to make the switch to principal-and-interest repayments where appropriate. AMP also promised to waive the switch fee for customers moving to principal-and-interest repayments until 30 June.

“We are managing our portfolio in a very active market but are committed to providing competitive rates to our customers to help them achieve their property goals, said Sally Bruce, AMP Bank’s group executive. “We also want to encourage customers to move to principal-and-interest repayments where it’s appropriate, as there is a great opportunity to access lower interest rates and repay your loan faster.

Bruce said the bank’s decisions on rates were made after careful assessment and reflect “wholesale funding costs,” as well as the need to maintain a balanced portfolio in light of the market environment.