ANZ hikes fixed mortgage rates, variable rates back in vogue

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on November 12, 2021 Fact Checked
ANZ hikes fixed mortgage rates, variable rates back in vogue

ANZ held out longer than the other major banks but on Friday it increased fixed rates by between 20 and 40 basis points.

A wide variety of rates were increased, including 'Breakfree' packages, and non-packaged loans, for investors and owner occupiers.

Some of the more noteworthy changes included: 

  • Breakfree Residential Fixed 1 Year 80%: 30 basis point increase to 2.29% p.a. (3.36% p.a. comparison rate*)
  • Breakfree Residential Fixed 3 Years 80%: 40 basis point increase to 2.79% p.a. (3.37% p.a. comparison rate*)
  • Breakfree Investment Fixed 1 Year 80%: 20 basis point increase to 2.59% p.a. (3.91% p.a. comparison rate*)
  • Breakfree Investment Fixed 3 Years 80%: 30 basis point increase to 2.99% p.a. (3.85% p.a. comparison rate*)

On Thursday NAB increased fixed rates, following Westpac and CBA which increased last week.

The major banks also increased rates on fixed loans in September-October.

Big four banks weren't alone in increasing rates, however, with Bank of Queensland, Bendigo and Adelaide Banks, and Tic:Toc following on Friday morning.

The bulk of rate increases applied to home loans for investors and owner occupiers, fixed between one and five years, hiked by between 11 and 50 basis points.

Variable rates back in vogue

The cuts haven't stopped for variable rates however, continuing the trend seen in recent weeks.

On Friday Bank of Queensland slashed investor and owner occupier home loans by up to 30 basis points.

BoQ-owned ME Bank also did similar, cutting by between 9 and 14 basis points.

On Thursday, ING cut variable rates by between 10 and 20 basis points.

So why is this happening?

This is basically the opposite of what was seen in 2020 when variable rates largely remained untouched and fixed rates got all the attention.

This was due to banks, particularly majors, tapping into the RBA's Term Funding Facility.

That's now ended and since then wholesale funding rates - called the 'swap' rates - have shot up (graph below), explaining why banks are increasing fixed mortgages again.

What could happen is largely a return to the status quo. Pre-pandemic, fixed loans made up less than one fifth of new mortgages, but now make up nearly half, but this percentage is slowly returning to 'normal'.

Anyone with a slightly cynical mind might also feel that banks are enticing borrowers back to variable rates because they are easy to hike when they see fit - such as if the RBA hikes its cash rate before 2024.

Having nearly half the mortgage book on fixed rates doesn't allow them that flexibility.

Fixed rates to rise sharply: ANZ

ANZFixedRates.jpg


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Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
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  • Extra repayments + redraw services
VariableMore details
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VariableMore details
NO UPFRONT OR ONGOING FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
NO UPFRONT OR ONGOING FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees

Rates correct as of November 27, 2021. View disclaimer.


Photo by Elekhh on Wikimedia Commons

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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