Posted Friday, 10 May 2013 at 11:25 by Shape Home Loans
Tagged: interest rates | news
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ANZ Bank has become the first big lender to cut interest rates more deeply than the change in the cash rate, reducing its mortgage rate by 0.27 percentage points. The cut, which comes after the Reserve Bank this week cut the cash rate by 0.25 percentage points, takes ANZ's standard variable mortgage rate to 6.13 per cent. It means ANZ's mortgage rate is equal to the standard variable rate charged by NAB, which has had the cheapest advertised mortgage rates for almost four years. Phil Chronican, the chief executive of ANZ's Australian business, said the move was driven by a fall in funding costs.
ANZ, which has the smallest presence in the mortgage market of the big four lenders, has also been aggressively expanding its market share in recent months. “This month we reviewed a range of factors including the Reserve Bank's decision to decrease the official cash rate this week, our competitive position and a recent easing in the cost of our wholesale funds," Mr Chronican said. “While competition for deposits remains strong, our overall funding cost position has allowed us to reduce variable mortgage rates by 0.27 per cent per annum."
The cut is the first time a major bank has given borrowers a bigger reduction in rates since the Reserve began its latest cutting cycle in November 2011.
It comes as banks have faced growing pressure to reduce home loan rates due to a fall in their funding costs. NAB chief executive Cameron Clyne, who has presided over the bank's strategy of having the lowest standard variable mortgage rate among the majors, conceded on Thursday that it would be harder to hold back part of any future interest rate cuts from borrowers, because the war for deposits that was pushing up costs has eased.
ANZ has led the way in banks' attempts to sever the long-standing link between Reserve Bank decisions and movements in mortgage rates, saying in November that it would review interest rates each month, independently of the central bank. At the time Mr Chronican said this could ultimately result in the bank cutting mortgages above and beyond decisions made by the Reserve, and Friday's move is the first time this has occurred. “This decision reflects ANZ's approach to reviewing retail lending rates each month which includes an assessment of our overall funding costs and I'm pleased our mortgage customers will see a benefit this month,” Mr Chronican said.
The slump in funding costs has also caused smaller lenders to pass on bigger cuts than the Reserve's 0.25 percentage point reduction. The Greater Building Society on Friday cut its standard variable mortgage rate by 0.3 percentage points, to 5.75 per cent.