ANZ has cut interest rates on fixed mortgages a week before the Reserve Bank of Australia (RBA) meets to decide cash rates. Those with deposits of 20% or more will benefit from a 0.25% reduction in fixed interest rates for years 1 to 5.
This is the second time in less than three weeks that Australia’s major banks have adjusted fixed mortgage rates. It’s not the only bank either, the other big four banks have also lowered their fixed rates in the past few months.
Yahoo Finance contributor Sarah Megginson said the trend showed that borrowers could receive interest rate relief from the RBA sooner rather than later.
“That’s because they know cash rates (and therefore variable rate mortgages) are going down,” Finder’s personal finance experts write.
“Inflation has cooled and the economy is now at risk of recession, so the RBA needs to loosen the purse strings to take pressure off the budget and keep the economy flowing.”
ANZ last adjusted its fixed rate on October 11, following a series of similar moves by the other big four banks.
NAB made fixed rate changes on 8 October and 22 July, Commonwealth Bank made adjustments on 23 August and Westpac announced changes on 21 August.
“Fixed rates remain firmly depressed across the market,” said Sally Tindall, director of data insights at Canstar.
“Nearly 30 financial institutions cut at least one fixed interest rate in October alone, but only five have raised rates this time.”
Rachel Weisel, a personal finance expert at Mozo, told Yahoo Finance that market-wide rate cuts have made it “increasingly clear” that we may be reaching the peak of the RBA’s rate hike cycle.
Will I have to sell my house if there is no interest rate cut this year? Email stew.perrie@yahooinc.com
“All these indicators suggest that the RBA’s next action is likely to be a rate cut rather than a further rate hike.
“We see this reflected in the recent reductions in mortgage rates, particularly long-term fixed rates. Banks are now most likely to offer relatively low interest rates, with fixed periods offering lower rates than variable rates. is most likely to be higher.”
In a survey of more than 3,500 Yahoo Finance readers, 69% said they expected the RBA to cut interest rates in the short term and were not interested in keeping them fixed.
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ANZ joined the remaining big four banks earlier this year after being the last to move to fixed rates.
But the second adjustment in less than a month shows the bank is working hard to change things for some customers.
“This strategic move for ANZ means that the bank now offers the lowest fixed interest rates of any major bank, as competition in this sector continues to drive rates down,” Mr Tindall said. .
“While ANZ’s new floor rate of 5.74% is unlikely to cause people to jump into fixed rates, it is enough to prompt some borrowers to take a look at their mortgages and look at their health. There is a possibility.”
Mr Tindall said ANZ’s new fixed rate was the lowest of the big four banks, but was still far from the lowest in the market at 4.99% for three-year loans from SWS Bank.
It’s not all good news for ANZ customers, with the bank increasing fixed interest rates by 0.15 percentage points for customers with deposits below 20%.
“Although ANZ may have increased fixed interest rates for customers with deposits of 20% or more, it has also increased interest rates for fixed rate customers with deposits below this amount, imposing a premium of 0.45 percentage points.” Mr Tyndall added.
“Risk-based pricing is nothing new, but at a time when real estate prices appear to be cooling, it’s interesting to see banks leaning into this strategy to attract safer borrowers to their books. .”
The Australian Bureau of Statistics will release key inflation data on Wednesday, revealing the performance of Australia’s economy over the past three months.
A sustained decline in inflation could prompt the RBA board to lower the official cash rate from its 12-year high of 4.35%.
The key figures are likely to fall within the central bank’s target range of 2-3%, and the focus will be on trimmed averages.
This is a measure of inflation that removes volatile price fluctuations, including the RBA’s planned temporary state and federal energy rebates.
There are only meetings left in November and December to provide some respite to mortgage holders under pressure.
Retail spending and housing data are also expected to decline, giving us a better picture of the impact on consumer confidence and the economy.
Commonwealth Bank: First rate cut in December 2024, 5 rate cuts, cash rate to 3.10%
Westpac: First rate cut in February 2025, 4 rate cuts, cash rate to 3.35%
NAB: First rate cut in February 2025, cash rate to 3.10% after 5 rate cuts
ANZ: First interest rate cut in February 2025, with three interest rate cuts, the cash rate will reach 3.60%
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The key indicator of underlying price pressures should remain at 0.8%, the same result as last quarter.
ANZ expects adjusted average inflation to be 3.5% for the year, down from 3.9% in the June quarter.
Adam Boyton, head of Australian economics at ANZ, and colleagues said that while an annual decline in trimmed average inflation would be welcome, the central bank is unlikely to start cutting interest rates at either of the two remaining Governing Council meetings in 2024. said.
The bank has signaled a start to rate cuts in February 2025, but said the risks of the adjusted average being higher or lower than expected are balanced.
Commonwealth Bank economists believe inflation will weaken, opening the door to the first 25 basis point interest rate cut in December.
But if the adjusted average results were stronger than the quarterly forecast of 0.7%, CBA head of Australian economics Gareth Aird said the central bank would “abandon its call for a calendar year rate cut”. .
Mr Aird said there would be other sources of data for the RBA board to digest ahead of the next cash rate meeting on Melbourne Cup day.
This includes retail sales for September released by the Australian Bureau of Statistics on Thursday and household spending indicators on Friday.
These two publications will provide the clearest signal yet on whether consumers are spending or saving their tax cuts.
“Our expectation is that consumer reaction has so far been subdued,” Aird said.
– With news wire
