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ANZ cuts variable interest rate, but there’s a catch

A person holding $100 Australian notes and the ANZ logo on the exterior of a building.
ANZ is tempting new customers by cutting its variable rate, but existing customers have been left behind. (Source: Getty)

ANZ has cut the rates on its basic home loan for new customers only, while existing variable customers are about to be hit with their eighth hike in as many months.

ANZ dropped the rate on its Simplicity Plus home loan by up to 0.10 per cent for owner-occupiers and up to 0.20 per cent for investors. However, the discounts are only reserved for new customers with big deposits.

RateCity.com.au research director Sally Tindall said ANZ cut its lowest variable rate in order to “stay in the refinancing game”.

“While the bank’s lowest variable rate is still above its rivals - CBA and Westpac - with a $4,000 refinancing cashback, it’s likely to tempt some new borrowers in the door,” Tindall said.

“ANZ borrowers might see these new customer discounts as a betrayal of their loyalty, but they’re actually a gift, because they can use these new advertised rates to negotiate a cut for themselves.”

Tindall said refinancing was at near-record highs at a time when thousands of fixed-rate loans were poised to roll back into the market.

“It’s no wonder the banks are taking the knife to their sharpest variable rates in a bid to attract these potential new customers,” she said.

Today's changes from ANZ for owner-occupiers paying principal and interest:

ANZ Simplicity Plus

Old rate

New rate

Change


Loan-to-value (LVR) 70% or less

4.69%

4.59%

-0.10%


LVR 80% or less

4.79%

4.69%

-0.10%


LVR over 80%

5.73%

5.73%

No change


And ANZ is not alone in discounting new customer variable rates, according to analysis from RateCity.com.au. Since the RBA hikes began in May, 38 lenders had cut at least one variable rate for new customers, including all four big banks.

During this time, the majority of existing variable-rate customers have seen their rates rise by 2.75 per cent.

Big Four banks loyalty tax

If someone took out one of the Big Four banks’ lowest variable rates in November 2021 – just 12 months ago – they would now be on a rate that was, on average, 0.42 per cent higher than what was now on offer to new customers, almost two standard RBA hikes more.

On a $500,000, 25-year loan, that difference could equate to an estimated $2,097 extra in interest over the next year, RateCity found.

“Since May, most variable borrowers have seen their rates rise by 2.75 percentage points, yet 38 lenders have cut variable rates for new customers,” Tindall said.

“Test out your bank’s loyalty by seeing what rate it’s offering new customers for the exact same loan. If you haven’t negotiated your rate in a while, you’re likely to find there’s ample evidence on their website to haggle for a cut.”

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