ANZ Bank joins Australia's three major lenders in raising rates

[SYDNEY] Australia & New Zealand Banking Group Ltd joined its three main competitors in raising its benchmark variable mortgage rate as Australian lenders seek to cover the cost of holding more capital.

ANZ Bank said the 18 basis-point rise by Nov 20 was in response to regulatory changes. National Australia Bank Ltd. earlier Friday announced a 17 basis-point increase from Nov 12 - a move that dragged the Australian dollar lower as it spurred speculation that the central bank may cut interest rates to offset higher home-loan costs for borrowers.

Commonwealth Bank of Australia, which raised A$5.1 billion (US$3.7 billion) in capital last month, will increase its variable mortgage rate by 15 basis points from Nov 20, the lender said in an e-mailed statement Thursday. Westpac Banking Corp last week announced it would increase its rate by 20 basis points.

The four banks have added almost A$20 billion in capital this year to meet regulations partly aimed at sheltering them from any downturn in the nation's housing market. Australian Prudential Regulation Authority Chairman Wayne Byres told a parliamentary committee Friday that the increased capital requirement "is not a costless exercise" and equates to an impost of 10 to 15 basis points on mortgage rates.

The Australian dollar, which fell to 72.04 US cents in morning trade after National Australia's announcement, was at 72.48 cents at 2:42 p.m. in Sydney.

Some economists are predicting property prices will fall over the next two years amid increasing supply and lower-than- expected population growth. The government said Tuesday regulators will take additional steps by the end of 2016 to ensure the nation's lenders have strong capital levels.

BLOOMBERG