ANZ Banking Group has left its variable interest rates unchanged but has raised a raft of fixed-interest mortgage products, as it indicates funding pressures will continue to rise.
After its monthly rate review on Friday, ANZ left its variable interest rate for retail mortgages at 7.36 per cent per annum, and also left its small business lending rate unchanged.
But ANZ on Friday, and before its monthly rate review meeting, lifted its residential one-year fixed mortgage rate by 10 basis points to 6.29 per cent.
Also, ANZ lifted its residential three-year fixed rate by 20 basis points to 6.34 per cent and raised its one-year and three-year fixed investment mortgage rates by 10 basis and 20 basis points respectively.
Interest rate comparison website RateCity said ANZ was the first of the major four banks to review some of its home loans since the Reserve Bank of Australia (RBA) left the cash rate on hold at 4.25 per cent on Tuesday.
Westpac, Commonwealth and National Australia have yet to make a decision on whether to change their rates in response to ANZ’s move.
However, Westpac chief executive Gail Kelly said this week that borrowers should expect smaller rate moves, more often.
Bank of Queensland remains the only bank to have lifted interest rates after the RBA’s March meeting, raising its standard variable home loan rate from 7.36 per cent to 7.46 per cent.
Suncorp Bank increased its residential and investment two-year fixed mortgage rates on Friday by 16 basis points to 6.14 per cent.
Greater Building Society, Queensland Police Credit Union, MyState, RAMS Home Loans, Illawara Credit Union, Catalyst Mutual and Mortgage House have also lifted various rates since Tuesday’s RBA board meeting.
ANZ said on Friday that its decision to keep its variable mortgage rate on hold followed an improvement in short-term wholesale funding costs in the past month, as markets had priced in an anticipated reduction in the RBA cash rate in February.
It also said that the trend for funding costs continued to be upwards due to rising average wholesale debt costs and competition for deposits.
“Our monthly pricing decisions remain difficult,” ANZ Australia chief executive Philip Chronican said in a statement.
“We are walking a tightrope between our customers’ interest in keeping rates as low as possible and the commercial reality that, while monthly funding costs go up and down, the upward trend is likely to continue as new funding is still coming on at a wider spread to the cash rate than the funding it is replacing.”
ANZ said it offered the second lowest standard variable mortgage rate among the big four banks, behind National Australia Bank’s 7.31 per cent.
RateCity said ANZ’s move to lift its three-year fixed rate (the most popular fixed rate choice among its borrowers) by 20 basis points was only a month after it lowered its packaged three-year fixed rate by 15 basis points at its interest rate review in February.
The rate comparison website said that borrowers who applied for ANZ’s three-year fixed packaged rate of 5.99 per cent last month and were awaiting their settlement period, now faced a rate of 6.19 per cent, costing an extra $1,332 over three years.
