In the days leading to the anticipated monetary decision by the Reserve Bank of Australia, ANZ and ING, two well-regarded Australian banks, boldly implemented steep interest rate hikes.
ANZ, ranking as the nation’s fourth largest bank, tightened its monetary policy on Friday. Both owner-occupiers and investors witnessed a rise in fixed rates by up to 0.35 percent points across terms extending to five years.
ING tactically mirrored this monetary adjustment, increasing its new customer variable rates by up to 0.08 percentage points. Additionally, it levied a hefty augmentation to its fixed home loan rates, hiking them by 0.40 percentage points for owner-occupiers.
The Reserve Bank of Australia, in a crucial move on Tuesday, will ponder over a potential upturn in the cash rate. The bank has held its prevailing rates for the past quarter, with the last raise materializing in June. However, a likely increment of 0.25 percent will thrust the official cash rate to 4.35 percent.
Sally Tindall, the Research Director of RateCity.com.au, noted the considerable prevalence of hikes over reductions in fixed rates in the past month across various banks. She emphasized that ANZ does not stand alone in these adjustments but rather operates within the framework of market trends and the rising expenses related to fixed-rate funding.
Tindall added that ANZ’s latest rate enhancement has positioned it as one of the pricier options among the four major banks’ lowest advertised fixed rates, except for its two-year loan term.
With new and refinanced loans opting for a fixed rate only accounting for four percent, Tindall suggested banks are unlikely to chance on underpricing these rates for the sake of new clientele. The result of these monetary shifts has consequently led ANZ from offering one of the most attractive fixed loan rates among the ‘big four’ to being one of the least competitive.
In a concluding note, Tindall posits that this does not mark ANZ’s departure from healthy market competition. In fact, when it comes to fixed rates, there is little competition to speak of.
Yet, these fixed rate augmentations may not be worth losing sleep over for borrowers. Recent financial data by ABS lending indicators demonstrated that only four percent of the new home loans in September chose fixed rates. This is a reflection of a dramatic shift away from July 2021, when nearly half of the new loans were at fixed rates.
