Yahoo FinanceANZ cuts variable home loan rate, but there’s a catch
Australia’s fourth-largest bank, ANZ, has cut its interest rates on its basic variable home loan by up to 0.2 per cent.
However, existing customers may be left feeling frustrated as the rate cuts are only for new customers with deposits over 20 per cent.
The largest discount will be going to borrowers with a deposit of 30 per cent or more.
Also read: Fixed rates under 2% to be ‘gone in 6 months’, expert predicts
Also read: ‘Forced to move’: Will interest rates rise in 2022?
Also read: Sound the inflation alarm: Interest rates need to rise
The move comes after continued pressure on lenders to cut their lowest variable loans, as competition in the market drives rates down, despite rising fixed rates.
RateCity.com.au’s database shows that in the past three months, 65 lenders have cut at least one variable rate.
Most cuts have been to lenders’ ‘no frills’ variable loans and for new customers only. The exception is Athena, which this week cut its lowest variable rates for new and existing customers.
There are now significantly more variable rates under 2 per cent than fixed, with 72 variable rates under 2 per cent and just 42 fixed.
RateCity.com.au research director Sally Tindall said ANZ was trying to chase down its Big Four bank competitor Westpac.
“Fixed rates might be on the rise but competition in the variable rate market is still alive and kicking,” she said.
“For months, Westpac has had the lowest variable rate out of the Big Four. ANZ has now thrown down the gauntlet in a bid to win new customers, matching Westpac’s lowest variable rate of 2.19 per cent.”
Tindall said variable rates were following a very different trajectory than fixed rates, but this may not last.
“There are 72 variable rates under 2 per cent, however, for most borrowers there’s a catch,” Tindall said.
“The vast majority of these variable rate cuts are reserved for new customers, so anyone looking for a rock-bottom rate will have to consider switching lenders, or at least haggle with their current bank.”
Tindall said borrowers could expect variable rates to continue falling for some time, but to prepare for rises.
“We expect variable rates will continue to fall over the next couple of months, however, as we get closer to the next cash rate hike, some lenders could move ahead of the RBA, particularly if the cost of funding continues to soar,” she said.
Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to the free Fully Briefed daily newsletter.
