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ANZ move 'proof' RBA to punish borrowers

Here are the behind-the-scenes price changes that prove the Reserve Bank will hike rates tomorrow.

ANZ and a number of other lenders have been quietly raising interest rates on fixed-rate mortgages over the past few weeks, signalling a strong chance the Reserve Bank (RBA) will hike rates tomorrow, according to financial data house Mozo.

On Friday, ANZ became the latest - and probably highest-profile - lender to hike fixed mortgage rates. It was a reversal of a move just six weeks ago when it cut its 1- and 3-year fixed rates by up to 30 basis points. Last week, it then lifted by more than one rate move - 25 basis points - but not by much more at a maximum of 35 basis points.

But, in what is a key clue to the broader interest outlook, ANZ did this on all of its 1- to 5-year terms, indicating that the institution believes rates will now stay higher for longer.

Exterior of ANZ bank.
ANZ hiked its rates last week and the RBA is expected to follow suit tomorrow. (Source:Getty) (Asanka Ratnayake via Getty Images)

ING appears to agree. On Friday, it also increased its fixed-term mortgage interest rates by 20 to 40 basis points, again on every term up to five years. ING has increased its five-year term by the highest 40 basis points while ANZ has only increased that period by 25 basis points.

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Know that both institutions upped the interest slightly for new variable-rate customers too.

Also by Nicole Pedersen-McKinnon:

The totalled biggest moves in October, according to Mozo, were:

  • Macquarie’s fixed rates are up 30 to 56 basis points, with the longer terms increasing more than shorter terms, suggesting the bank is betting on rates heading higher and staying there for a while

  • AMP increased fixed rates for most borrowers with 1-year up 10 basis points, 2-year up 15 to 25 basis points, and 3- and 5-year rates up 15 to 40 basis points

  • Bendigo Bank lifted its fixed rates by 5 to 40 basis points

  • Great Southern Bank’s fixed rates are up 10 to 25 basis points

  • HSBC increased fixed rates by 15 to 60 basis points, with longer terms getting larger increases

  • Greater Bank’s 2- to 5-year rates are down 15 or 20 basis points – this lender is clearly an outlier

What it means for tomorrow’s rate decision

Rachel Wastell, PR and communications manager at Mozo, said: “If you see a number of banks raising fixed rates - especially when the moves come from some of the biggest banks in the market - it’s typically a sign they expect interest rates to rise and borrowing costs to increase.”

They do it to mitigate risk and keep profits stable.

“Moves in this area can be a valuable indicator for borrowers and investors to understand the trajectory of future interest rates,” Wastell said. It appears from the behind-the-scenes price changes that - at least once more - the only way is up.

So, Aussies with money in the bank, or money to put in term deposits, will be rejoicing. Not so much mortgage holders. But, in my very next column, I will reveal where you can get cheap fixed mortgage rates. Because they are still – for now – out there.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, Twitter and Instagram.

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