Westpac, the bank with the largest share of Investment Home Loans will be the last of the big four to tweak their rates, following recent changes at NAB, ANZ and CBA. However, systems limitations may cramp their style according to reports today.
According to SMH Business Day,
“Westpac Banking Corp is missing out on $1 million a day that its competitors are now creaming from landlords because its computer systems will not allow it to charge differing interest rates.
Westpac, which is the largest lender to landlords, is the only one of the big four banks not to have increased interest rates for property investors in recent days.
National Australia Bank on Monday said it would raise rates by 0.29 percentage points on all interest-only loans following Commonwealth Bank of Australia and ANZ Banking Group, which last week raised rates for investors only.
Sources said NAB is constrained from charging different rates to investors and owner-occupiers because of technical problems. The bank declined to comment.
Westpac too is finding it challenging to distinguish between investors and owner-occupiers, sources said.
Westpac and NAB use a single “reference rate” for owner-occupier and investor borrowers, which means they cannot increase the standard variable rate for property investors without also hitting owner-occupiers.
Banking sources said it might take Westpac several months to work through systems issues to enable it to charge different rates. This could involve senior members of the IT team re-coding some of the banking systems to allow different reference rates even though the bank has created different home loan products for investors and owner-occupiers.The pressure on Westpac to resolve its systems issues to enable it to charge different rates is growing because senior bankers tip a bifurcation of the home loan interest rate market, with owner-occupiers and investors expected to pay different rates in coming years.
Up to 1998, it was common for banks to offer owner-occupiers lower interest rates compared to property investors. The interest rate differential was around 1 percentage point”.
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