SYDNEY, July 27 (Reuters) - National Australia Bank Ltd NAB.AX , the country's No.4 lender by market value, on Monday said it would raise variable mortgage rates on interest-only loans by 29 basis points.
NAB follows rivals Australia and New Zealand Banking Group Ltd ANZ.AX and Commonwealth Bank of Australia CBA.AX that raised variable rates on loans for homes bought for investment purposes by 27 basis points last week.
The Australian Prudential (LONDON:PRU) Regulatory Authority (APRA) has asked banks to keep annual growth in investment home loans to below 10 percent in an attempt to cool red-hot property prices in Sydney and Melbourne.
Interest-only loans are popular with property investors, as they allow one to lower mortgage repayments in the short-term while the value of property grows.
For new loans, NAB's interest-only rate changes will be effective Aug. 10, while the change for existing interest only variable rate loans will be effective Sept. 10.