Suncorp hikes its home loan and small business interest rates

By Michael Mata
Four weeks after increasing interest rates for investor home loans, Brisbane-based Suncorp also lifted its home loan and small business interest rates.

On January 4, Suncorp hiked its standard variable interest rate for new and existing owner-occupier borrowers by 15 basis points to 5.55%, effective from January 23.  

The news comes as Digital Finance Analytics warned that approximately 20% of households with an owner-occupied mortgage would face significant mortgage stress if interest rates rose by less than 50 basis points this year.  

The mid-tier lender blamed the move on higher funding and regulatory costs. Suncorp’s rate hikes are in line with forecasts from Morgan Stanley analysts, who predicted last month that regional banks would follow the major lenders and lift rates, obtaining a greater proportional profit boost in the process.

Suncorp’s mid-tier rivals - Bank of Queensland, ING Direct, and Bendigo and Adelaide Bank - have waited longer to reveal their strategies. They’ve raised borrowing rates for both investors and owner-occupiers, repricing their entire home loan books and generating greater income in the process.

“Increasing competition for quality funding sources, the cost of meeting regulatory change and events overseas that have altered the outlook for interest rates globally, have led to rising funding costs,” David Carter, Suncorp’s banking and wealth chief, told The Australian Business Review.

While lifting rates risks weakening demand for home loans, Carter believes Suncorp’s rates remain competitive. Its Back to Basics rate will be 4.97%, and Suncorp said most customers will pay below the headline rate.