Is this the start of the business loan rate hikes?
Suncorp has announced an increase to its small business loan rates.
Along with an increase for variable mortgage holders, Suncorp has announced a rate hike for its small business customers. The lender will increase its small business rates by 0.10% p.a. and its variable rate home loans by 0.17% p.a.
Suncorp's announcement comes after Westpac's surprise out-of-cycle rate hike which saw the lender increase both its owner-occupier and investor home loan rates by 0.14%.
While Westpac made no changes to its business loan rates, Suncorp's changes to both home loan and small business loan rates are more in line with rate changes in the past. Typically, with rate changes, lenders will increase or decrease rates across home loan and small business products. This is the case when they are out-of-cycle with cash rate changes and when the Reserve Bank changes the cash rate.
It's also common for lenders to follow each other's suit with out-of-cycle rate changes. So, it's not unlikely that we will see more rate hike announcements in the coming days. The question is whether small business loan rates will be changed alongside home loan rates.
Suncorp's banking and wealth CEO David Carter said the decision to increase rates was due to funding costs.
“In March we acknowledged the increase in the Bank Bill Swap Rate (BBSW), which has continued to rise. This has benefited customers who have their money in savings accounts, with our term deposit rates up over 0.20% on average,” he said.
“This has also driven demand for our high interest savings products, such as our Growth Saver account. While we have been absorbing this increase, the changes announced today are necessary to ensure our ongoing ability to support lending growth for home loan, small business and agribusiness customers."
Suncorp noted that while commercial and agribusiness customers were not affected by today's rate increase, the fact that their rates are linked to the BBSW means they are already experiencing the effect of rising wholesale rates.
The new rates are effective from 14 September 2018.