ANZ stuns homebuyers with hike in mortgage rates for digital bank customers ahead of expected RBA cut

West Australian

3 days ago

A big four bank has stunned prospective homebuyers by hiking mortgage rates — just days before the Reserve Bank is expected to deliver a third round of relief for struggling households.
ANZ dropped the bombshell on Thursday, revealing its digital bank ANZ Plus would add 0.16 percentage points to its owner-occupier loans, taking the rate to 5.75 per cent. Investment loans will rise by the same margin to 6.05 per cent.
The move flies in the face of a near-certain cut in the official cash rate due to come early next week after the RBA holds its two-day meeting.
Last week's quarterly inflation data showed the closely-watched measure of underlying consumer prices — which strips out any volatility in movements — had dropped to 2.7 per cent, well within the central bank's 2 to 3 per cent target range.
The RBA wrong-footed many investors last month by keeping borrowing costs unchanged at 3.85 per cent against widespread bets on a cut.
Governor Michele Bullock later said the board wanted to see the quarterly consumer price data for confirmation that pressures were abating. But the resilient job market could still derail further relief.
ANZ's move to lift rates came as rival NAB jumped early and lowered fixed mortgage rates.
It announced anyone willing to lock in their mortgage rate for one or two years could get a 0.25 percentage-point reduction on the previous rate. The bank has knocked 0.1 percentage points off the interest rate for three-to-five-year fixed mortgages.
NAB's reductions apply to investment properties as well.
A 25 basis-point reduction in mortgage rates will save a household $90 a month on repayments if they are an owner-occupier, paying principal and interest, with a $600,000 debt and 25 years left on the loan. A mortgage holder owing $1 million would save $150 a month with a quarter-point cut.
A host of smaller lenders moved quicker than the big four in cutting rate offers. Multiple lenders outside the big four have their lowest offerings at 4.94 per cent for two and three years.
'While an RBA cut looks to be a near-certainty, if you've got a mortgage, don't bank on any extra cash until it lands in your bank account,' Canstar data insights director Sally Tindall Tindall said this week.
'The RBA has shown it doesn't dance to the beat of market expectations — it's the one steering the ship.
'Banks are also at the helm of your mortgage and while we expect the big banks to step up to the plate and pass the next cut on in full, there's no guarantee every lender will do this.'
ANZ, Commonwealth Bank, NAB and Westpac are all tipping a 25 basis-point cut from the RBA next week.
The Australian sharemarket indicates a 51 per cent chance the RBA will make a 0.5 percentage point cut.