ANZ cuts variable mortgage rates by up to 90 basis points - but there's a catch

author-avatar By on April 23, 2021
ANZ cuts variable mortgage rates by up to 90 basis points - but there's a catch

ANZ has slashed variable rates on its Breakfree mortgage by up to 90 basis points, making it the lowest variable rate package among the big four banks.

The bank's new rate on its Breakfree Standard variable loan is 2.99% p.a. (3.42% p.a. comparison rate*) for owner-occupiers making principal and interest (P&I) repayments with 80% LVR. 

But the catch is that only new customers will be eligible for the lower rate, meaning existing borrowers will miss out. 

Related: What is a package home loan?

ANZ also reduced rates for owner-occupiers making interest-only (IO) repayments with 80% LVR by 90 basis points, taking the new rate to 3.54% p.a. (3.58% p.a. comparison rate*).

Investors won't miss out either: the bank reduced rates for investors making P&I repayments with 80% LVR on the Breakfree package by 90 basis points to 3.59% p.a. (4.00% p.a. comparison rate*). 

Investors making IO repayments with a 80% LVR also received the 90 basis point cut to 3.84% p.a. (4.06% p.a. comparison rate*). 


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.


This marks the first variable rate cut by a major bank since September last year, with cuts to fixed rates having been the focus for banks lately.

Last week Bankwest, Newcastle Permanent, and Greater Bank all raised rates on fixed home loan products, while Adelaide Bank recently hiked some of its variable interest rates by up to 15 basis points.

That could be a sign that banks have forecast their wholesale funding costs will rise in the coming months and years and that interest rates could start rising sooner than anticipated, despite Reserve Bank governor Dr Philip Lowe repeatedly stating the official cash rate will remain at 0.10% until at least 2024.

Read more: Why are home loan rates climbing when the cash rate is still 0.10%?

What other lenders cut home loan interest rates this week?

AMP Bank

  • Professional Package Investment Fixed P&I 2 years with 80% LVR: Cut by 25 basis points to 2.24% p.a. (3.72% p.a. comparison rate*)
  • Professional Package Investment Fixed P&I 2 years with 90% LVR and LMI: Cut by 25 basis points to 2.34% p.a. (3.74% p.a. comparison rate*)
  • Investment Basic Fixed P&I 2 years: Cut by 25 basis points to 2.44% p.a. (3.15% p.a. comparison rate*)
  • Professional Package Investment Fixed IO 2 years: Cut by 24 basis points to 2.44% p.a. (3.34% p.a. comparison rate*)
  • Investment Basic Fixed IO 2 years: Cut by 24 basis points to 2.54 p.a. (3.17% p.a. comparison rate*)

BCU

  • Residential Fixed P&I 1 year: Cut by 31 basis points to 1.67% p.a. (3.84% p.a. comparison rate*)
  • Investment Fixed P&I 1 year: Cut by 31 basis points to 1.87% p.a. (4.00% p.a. comparison rate*)
  • Investment Fixed IO 1 year: Cut by 31 basis points to 1.97% p.a. (4.01% p.a. comparison rate*)
  • Residential Fixed P&I 2 years: Cut by 20 basis points to 1.78% p.a. (3.66% p.a. comparison rate*)
  • Investment Fixed P&I 2 years: Cut by 20 basis points to 1.98% p.a. (3.82% p.a. comparison rate*)

Photo by pear285 via Flickr

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Emma Duffy joined Savings.com.au as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's passionate about empowering people to make smart financial decisions and improve the financial literacy of Australians by translating complex finance topics into understandable, relatable content.

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