Margin lenders hit with double whammy

Margin lending clients are being hit from both directions, with not only falling stock prices causing concern, but also the upward trend in margin lending rates, which is outpacing official cash rate increases as increased funding costs bite and lending cash to buy stock becomes perceived as a greater risk.

CommSec Margin Lending increased its variable rate by 15 points in December to 9.65 per cent, after 25 point rises in August and November, which were in line with the Reserve Bank.

The CommSec three-, six-, nine- and 12-month fixed margin lending rates moved 20 points in August, which was followed by a 55 point November jump to 9.5 per cent.

Two- and three-year fixed margins have increased by 90 points since August to 9.65 per cent.

The Macquarie Margin Loan variable increased 25 points in August and November, with a 20 point rise added in September, with the current rate 9.85 per cent for a minimum investment of $20,000.

BT Margin Lending Online variable rates are up 70 points since August to 9.65 per cent, with 3-, 6- and 9-month fixed rates up 70 points to 9.5 per cent, with the 12-month rate up slightly less at 65 points, bringing the current rate to 9.45 per cent. The minimum loan is $20,000.

St George bank is following the more is less strategy, viewing the larger margin loan as the less risk, with the $500,000 and up bracket increasing 65 points since August to 9.25 per cent.

The $250,000 to $500,000 bracket is charged at a 25 point discount after rising 65 points over the same period to 9.5 per cent.

The $20,000 to $250,000 bracket followed the 65 point trend increase, but is currently 50 points more expensive than the top bracket at 9.75 per cent.

Interest rate data and changes are sourced from InfoChoice.