ANZ has cut its variable interest rate for new customers as it scrambles with other big lenders for a slice of the increasingly competitive borrowing market.
ANZ has taken steps to secure its place in a hyper-competitive borrowing market by cutting its variable interest rate – but only for new customers.
The move comes as Australia’s biggest lenders jostle for an increasingly precarious slice of the mortgage market, with the Reserve Bank launching a steep bullish cycle just three weeks ago with a 25bp hike to 0.35%.
Borrowing costs are expected to rise and put pressure on banks’ margins in the year ahead, with the RBA potentially raising the cash rate target above 2.5% to curb soaring inflation .
ANZ announced this week that it would cut the rate on its Simplicity Plus product by 15 basis points to 2.29%, putting it below rivals Commonwealth Bank, Westpac and National Australia Bank.
This rate comes with conditions: it applies only to new customers and homeowners who pay principal and interest, with a loan-to-value ratio of 70%.
ANZ is not the only bank taking action to attract new customers.
Last Tuesday, Westpac raised rates for new and existing customers by 0.25% on the majority of its variable rate loans.
However, on its lowest variable rate, it reintroduced a honeymoon rate of just 2.09%, which increases by 0.40 percentage points after two years.
CBA also last week launched Unloan, a new digital offering with a starting floating rate of 2.14%.
RateCity.com.au research director Sally Tindall said each of these moves puts more heat into the market to keep rates competitive for new customers.
“If you’re on a variable rate that’s going up, don’t just accept your fate — get yourself a rate reduction by switching to a lender willing to put a competitive price on your business,” Ms Tindall said.
“The RateCity.com.au database shows there are still at least four lenders offering variable rates below 2% after May’s cash rate hike, including a 1.79% rate from Homestar Finance.
“Floating rate customers with ANZ and Westpac in particular should pick up the phone and ask their bank where their loyalty stands.
“If years of paying your bank thousands of dollars in interest isn’t enough to get you a better rate, it might be time to move your business elsewhere,” she said.