ANZ Bank has announced it will increase interest rates on its variable mortgage and small business lending by 0.06%.
It also announced a drop to its 3-year fixed rate mortgage package to 0.15%.
Boy will this create a stir!
Effective February 17, ANZ’s new standard variable mortgage rate will be 7.36% per year.
New small business rates are also effective from 17 February 17. ANZ and Westpac now have the highest variable mortgage rates of the big four.
The bank blamed the rates it has to pay on deposits and higher wholesale funding costs for increasing the variable rate following the RBA leaving rates unchanged earlier this week.
ANZ CEO Australia Philip Chronican says the decision may leave some people “frustrated and even angry but believe Australia needs safe, well-run commercial banks that aren’t a burden on taxpayers and that can continue to lend”.
Damian Smith, RateCity’s CEO said this was potentially risky by the fourth-largest lender of owner-occupied home loans in Australia.
“RateCity estimates that there are approximately 400,000 variable rate home loan customers with ANZ who will be affected by this rate rise (not including those with a business loan).
“While the rate rise will only add marginally to most of these customers’ monthly repayments – around $12 per month for a $300,000 mortgage or $24 per month for a $600,000 mortgage, for example – it still sends a signal that the big four banks will push up rates by more than the Reserve Bank cash rate in future.
Only by comparing and switching to a better deal will borrowers be able to stop this “rate creep”.
“The rate increase will add an extra $2.36 million in interest revenue per month for ANZ or $28.3 million per year. ANZ is relying on customer inertia to allow this and future increases, but borrowers should remember that it would only take around 2,500 of ANZ’s variable rate customers to switch in order to make ANZ worse off” said Smith.
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