ANZ Bank has followed National Australia Bank in raising interest rates for some of its business customers, also increasing rates on some lines of credit.
Blaming higher funding costs and tougher regulation, ANZ is raising rates on various business overdraft and term loans by 0.21 percentage points.
The move will affect small to medium businesses, and the actual rate customers pay will depend on the exact loan product they have.
Interest rates for lines of credit secured against residential property – loans that are often used by home owners to fund renovations – will increase by 0.27 percentage points, to 5.98 per cent.
“Bank funding costs have been rising since May last year in anticipation of an increase in US interest rates by Federal Reserve,” ANZ said.
“These higher funding costs are now locked in for the foreseeable future and while we have worked hard to absorb as much as possible, we now have no choice but to pass on some of the higher cost.”
It also referred to rising capital requirements for banks, saying regulatory costs continued to increase.
The move follows this week’s news that NAB, the country’s biggest lender to business, is also raising business interest rates by as much as 0.29 percentage points.
Rival bankers estimate that NAB’s move will cover the majority of its business loan book, which is seen as the “jewel” in the crown for the Melbourne-based lender.
Given the big banks’ tendency to match each other’s pricing, there is speculation other banks will follow NAB and ANZ’s move.
Westpac and Commonwealth Bank said their interest rates were always under review.
The two rate hikes come after an increase in banks’ wholesale funding costs, which have returned to near two-year highs as credit markets grow more cautious.
It also follows a lift in business demand for loans in recent months, with the annual rate of business credit growth lifting to more than 6 per cent in each of the last three months, its quickest pace since early 2009.