By Roger Ward

OPINION: The Westpac Bank announced on 14th October it was increasing home loan interest rates by 0.2% across its home loan portfolio. While stating this was in response to the Federal Governments regulator APRA, those of us in the industry are a little sceptical since the move will gouge hundreds of Millions in additional revenue for the Bank.

Over the last 3 months most banks have announced changes to their credit policy under the guise of a sympathetic acknowledgement to ASIC and APRAs concerns that Banks need to assist in cooling the Sydney and Melbourne property markets. This move from APRA came after the explosion in investor participation in the market where investors represented up to 60% of new customers in the later months of the Sydney property boom.

Despite APRA’s concern over investor participation in the market Westpac announced it was increasing home loan interest rates on owner occupied loans even after a raft of previous changes including stricter lending regulations, higher interest rates for investors, and more conservative lending servicing criteria across the board for home buyers.

This will potentially be a bad outcome for regional areas like Cairns who have not experienced the recovery in the housing market like that of Sydney and Melbourne. Regional areas like Cairns look to be the unintended casualties of capital city centric policy as banks look to be applying ‘across the board’ changes to lending policy which may dampen lending activity nationally, not simply in the only 2 markets that are causing a problem, notably Sydney and Melbourne.

With talk over the last year concerning geo-specific macro prudential reforms focusing on the Sydney investor market, these recent changes seem to fly in the face of the very essence of the problem that has developed in the economy, that of a two tier economy where regional areas are still trying to regain their feet after the devastation of the GFC.

Not only do Queenslanders suffer the highest insurance rates in the country, but now the Federal Governments Regulators look to oversee the potential undermining of the real estate recovery in Far North Queensland.