Australian banks cut basic variable home loan rate up to 0.43%

The country’s “big four” banks are offering discounts to customers with deposits of 30 percent or more 

As reported by 9News, ANZ bank has joined other big Aussie lenders in cutting its basic variable home loan rate, leading experts to predict an earlier-than-expected interest rate rise.  

ANZ has become the latest lender to cut its basic variable rate by up to 0.43 percent for owner-occupiers paying principal and interest.  

Alike the “big four”, ANZ now offers discounts to customers with deposits of 30 percent or more as a counter-offer against riskier home loan lending.  

Steve Mickenbecker, Canstar finance expert, said this move indicates that the bank expects the Reserve Bank of Australia (RBA) to increase interest rates earlier than 2024.  

“ANZ’s cut in variable home loan interest rates sends a very clear message that the bank is expecting the Reserve Bank to cut the Cash Rate late next year or early in 2023,” Mickenbecker said. 

“The big banks are still offering short-term fixed rates below their variable rates, but borrowers can expect to see them continue to rise. The fixed-rate bargains are not going to get any sharper than they are now. 

“The market trend to pricing higher for lower deposit loans is continuing, with owner-occupied borrowers in this group paying 0.20 percent more at ANZ than their larger deposit counterparts,” he added.  

Moreover, Mickenbecker said that such discounts to buyers with deposits of more than 30 percent are another blow to first homebuyers, who find saving for a deposit harder than servicing a mortgage.  

“The banks are chasing new business hard while the market is strong, but are insuring their portfolio against a possible fall of house prices from their now lofty heights,” he said. 

“The trend of higher interest rates for lower deposit borrowers is another kick in the teeth for first home borrowers already reeling from the high property entry prices.” 

As of now, the nation’s interest rates hold at a record-low level of 0.1 percent. This follows various implementations released to stimulate Australia’s economy amid the COVID-19 pandemic.  

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The RBA has long maintained that an increase to the official cash rate will only come when inflation is sustainably in the two to three percent range and wages growth is stable. 

Housing values in Australia have grown at the fastest annual pace since June 1989, an astonishing 17.6 percent surge over the first nine months of 2021.