This is the second time the major Aussie bank has adjusted its fixed home loan rate in less than three weeks. It’s not the only one either, with the other big four banks cutting fixed rates over the last few months.
Yahoo Finance contributor Sarah Megginson said the trend indicated that borrowers could be getting interest rate relief from the RBA sooner rather than later.
“It’s because they know the cash rate (and therefore, your variable rate home loan) is on the way down,” the Finder personal finance expert wrote.
“Inflation has cooled and we’re now at risk of recession, so that RBA has to take the pressure off our budgets and keep the economy flowing by loosening our purse strings.”
ANZ last adjusted its fixed rates back on October 11 and comes after a string of similar movements from the other Big Four banks.
“Fixed rates are still firmly falling across the market,” Canstar data insights director Sally Tindall said.
“Almost 30 lenders have cut at least one fixed rate in October alone, while just five lenders have hiked in this time.”
Mozo personal finance expert Rachel Wastell told Yahoo Finance the cuts across the market made it “increasingly clear” that we were likely at the peak of the RBA’s rate hiking cycle.
Will you have to sell your house if there isn’t a rate cut this year? Email stew.perrie@yahooinc.com
“All of these indicators suggest that it is likely the RBA’s next move will be to cut rates, rather than raise them further.
“We can see this reflected in the recent cuts to home loan rates, particularly longer term fixed rates – where banks have the most opportunity to offer comparably low rates now that will most likely end up higher than variable rates during those fixed terms.”
A poll of more than 3,500 Yahoo Finance readers showed 69 per cent weren’t interested in fixing their rates as they were hopeful of the RBA cutting rates in the near-term.
ANZ joined the rest of the big four earlier this year, after being the last one to make a move on fixed rates.
But a second adjustment in less than a month shows the bank is trying hard to move the needle for some customers.
“This strategic play from ANZ means the bank now offers the lowest fixed rate out of the majors as competition in this space continues to push rates south,” Tindall said.
“While ANZ’s new lowest rate of 5.74 per cent isn’t likely to see people rush into a fixed rate, it could still be enough to encourage some borrowers to stop and do a health check on their mortgage.”
Tindall said while ANZ’s new fixed rate is the lowest of the big four, it’s still far from the lowest in the market at 4.99 per cent for a three-year loan from SWS Bank.
It wasn’t all good news for ANZ customers, as the bank increased fixed rates for customers with deposits of less than 20 per cent by 0.15 percentage points.
“ANZ might have sharpened its fixed rates for customers with a 20 per cent deposit or more but it’s hiked the rates for fixed-rate customers with deposits of less than this, charging them a premium of 0.45 percentage points,” Tindall added.
“Risk-based pricing is nothing new, but it’s interesting to see the bank lean into this strategy in a bid to attract safer borrowers onto its books at a time when property prices appear to be cooling.
Crucial inflation data will be released by the Australian Bureau of Statistics on Wednesday, shedding light on how Australia’s economy has performed in the last three months.
A sustained drop in inflation may encourage the RBA board to cut the official cash rate from a 12-year high of 4.35 per cent.
The headline figure may fall inside the central bank’s two-three per cent target band, focus will be on the trimmed mean.
That’s a measure of inflation that strips away volatile price moves, including temporary state and federal energy rebates the RBA plans to look through.
There’s only the November and December meeting left to give under-pressure mortgage holders reprieve.
Retail spend and housing data are also set to drop, which will give a better picture of consumer confidence and impacts on the economy.
Commonwealth Bank: First cut in December 2024, with 5 cuts to bring cash rate to 3.10 per cent
Westpac: First cut in February 2025, with 4 cuts to bring cash rate to 3.35 per cent
NAB: First cut in February 2025, with 5 cuts to bring cash rate to 3.10 per cent
ANZ: First cut in February 2025, with 3 cuts to bring cash rate to 3.60 per cent
The key measure of underlying price pressures should hang on at 0.8 per cent, the same result as the quarter before.
On an annual basis, ANZ was predicting trimmed mean inflation of 3.5 per cent, down from 3.9 per cent in the June quarter.
ANZ head of Australian Economics Adam Boyton and his colleagues said the lower annual rate of trimmed mean inflation would be welcomed but was unlikely to prompt the central bank to start cutting rates at either of the two remaining board meetings in 2024.
The bank, which is tipping a February 2025 start to cuts, said risks of a hotter or cooler trimmed mean than forecast were in balance.
Commonwealth Bank economists believe inflation will come in weaker and open the door for the first 25-basis-point cut in December.
Yet if the trimmed mean comes in any stronger than its quarterly forecast of 0.7 per cent, CBA head of Australian economics Gareth Aird said the bank would “jettison our call for a rate cut this calendar year”.
Ahead of the next cash rate meeting on Melbourne Cup day, Aird said there would be other data sources for the RBA board to digest.
That included September retail sales from the Australian Bureau of Statistics on Thursday and the monthly household spending indicator on Friday.
The two publications would provide the clearest signals yet on whether consumers are spending or saving their tax cuts.
“Our expectation is that the consumer response has so far been muted,” Aird said.
