The Reserve Bank won’t hand down its next interest rate decision for another six days, but one of the big four isn’t waiting around to see if a cut is, as expected, on the way.
ANZ announced today it was cutting interest rates on its fixed-rate home loans by up to 0.35 per cent.
The move brings its lowest fixed offering – which applies to two-year terms – down to 5.19 per cent, the lowest of any of the big four banks.
“This move by ANZ consolidates its lead as the lowest-cost fixed rate lender out of the majors,” Canstar data insights director Sally Tindall said.
“The bank is factoring in the possibility of further cash rate cuts, which could be coming down the line as soon as next week.”
The RBA’s monetary policy board is considered a near-certainty to reduce the official cash rate at next week’s meeting, held on Monday and Tuesday, with the market pricing in a 97 per cent chance of a cut to 3.60 per cent.
However, ANZ is actually one of the few major institutions that is not expecting the next cut to be handed down until August.
“It’s interesting that ANZ is the only big four bank still tipping that a rate cut is coming next month – not next week – yet they are the first to cut fixed rates since the May RBA cut,” Mozo personal finance expert Rachel Wastell said.
“Nevertheless, whether it’s next week or next month, the latest inflation figures show that there is definitely space for the RBA to cut again.”
With just 3 per cent of ANZ mortgage customers on fixed rates, Tindall said ANZ’s pre-emptive cut could be a move designed to claim more of that particular market.
However, there are plenty of lenders outside the big four who are offering lower fixed rates.
“While ANZ’s fixed rates are streaks ahead of the other big banks, particularly on shorter terms, they’re still a far cry from the lowest fixed rates in town, with a total of 13 different lenders now offering at least one fixed rate under 5 per cent.
“If you’re looking to lock in your rate, don’t go aiming for one that starts with a five or a six. You should be looking in the fours.”
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