Aussie down after CBA raised home loan rate by 0.15%

Thursday, Oct 22 2015

As Business Insider reports that Commonwealth Bank, Australia’s biggest mortgage lender, has raised its standard variable home loan rate by 0.15 of a percentage point. Westpac last week announced it was raising its variable home loan rates by 0.2 of a percentage point to 5.68%, a move it blamed on the need to meet stricter rules on the amount of new capital banks have to hold.

Together the two banks make up about half the home loans in Australia. And the Commonwealth joining Westpac in lifting rates makes it more likely the Reserve Bank will cut official cash rates. “The Commonwealth Bank is supportive of an Australian financial system that is strong, stable and competitive,” says Matt Comyn, Group Executive for Retail Banking Services.

The bank recently raised $5.1 billion to strengthen its capital position in line with regulatory requirements. Like Westpac, the Commonwealth linked the decision to increase home loan rates to the new capital rules designed to make banks safer from a financial crisis. “We have now reviewed our home loan pricing in light of these changes,” Comyn says.

“The cost of the new capital required to make the Australian banking system more secure needs to balance the interests of our customers, as well as the nearly 800,000 households who are direct shareholders and the millions more who are invested through their superannuation funds.”

Aussie fell after the news and is currently being trade around 0.72 handle. Pair is likely to find support around 0.7160 level and resistance above 0.7280 area. Later today, in the US session, Unemployment Claims figures are scheduled for a release.

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