Why is NAB chief executive Andrew Thorburn smiling as they announce their interest rate hike today?
National Australia Bank announced today they will hike interest rates for property investor loans by 0.25%pa.
The Reserve Bank’s dilemma for the past few years is it needs to keep interest rates low in hope of stimulating the broader economy. But that has fuelled the surge in housing investor activity and pushed up house prices.
So NAB has happily taken the lead to push-up the price of money for housing investors, who were already paying a premium over owner-occupiers after the 2015 rate hike.
NAB have said the cost of funding its loan book is rising as US bond rates rise. But most of the current rate hike is going straight to bottom line profit.
That’s maybe why Andrew Thorburn is smiling.
NAB also budging up owner occupied interest rates by 0.07%pa. And experts predict the other banks will follow NAB’s lead in the coming weeks.