Heritage grabs first mover disadvantage

Jason Bryce
After two weeks of media speculation, rumours, and phone calls from Treasury, one lender has moved, independently of the RBA, to raise rates on standard variable mortgages.

Toowoomba-based Heritage Building Society quietly raised its standard variable mortgage rates on Friday by 15 basis points, taking its standard variable mortgage rate for owner occupiers and investors from 5.30 to 5.45 per cent. InterestRateNews, a new financial comparison website, picked up the rate change yesterday.

That still compares favourably with the major lenders. Commonwealth's "Complete Home Loan - Variable Rate" is currently set at 5.74 per cent.

Heritage released a statement to The Sheet yesterday explaining that the decision to raise rates was made reluctantly and pointed out that they passed on in full the RBA's 0.25 per cent April rate cut, unlike many other lenders.

"Heritage has continued to carry the reduction made in April until now and continues to absorb as much of additional funding costs as possible," the Heritage statement read. "Changes in repayments are effective from 1 November 2009."

Last week, The Sheet reported on industry rumours and media speculation regarding the possibility of one or more of the majors moving to raise rates by 10 or 15 basis points. ANZ quickly responded by sending through an emphatic denial.

"Funding costs are still high but there is no pressing need to review the standard variable rate out of cycle at present and we have no plans to do so," wrote Paul Edwards, group general manager corporate communications.

Meanwhile Bank of Western Australia is set to market a capped home loan, a product option given little emphasis in the market in the past.

The Australian reported the capped loan will be based on a discounted standard variable interest rate of 5.4 per cent, 30 basis points below BankWest's current variable interest rate of 5.7 per cent, and capped at 7.5 per cent until late 2012.