Big bank fixed rate frenzy: ANZ hikes by up to 0.75% in three weeks

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Australia’s fourth-largest bank, ANZ, has hiked its fixed rates for the second time in three weeks.

All four big banks have now hiked fixed rates following the RBA meeting 10 days ago.

Like CBA, ANZ now has no advertised home loan rates under 2 per cent.12374331_l

The biggest increase is to ANZ’s 3 years fixed rate for owner-occupiers paying principal and interest, which has hiked by 0.40%. With this same rate rising by 0.35% on October 22, this has seen the major bank’s 3-year fixed rate jump by 0.75% in three weeks.

ANZ has also hiked its 1, 2, 4, and 5 year fixed rates today for owner-occupiers paying principal and interest by 0.30%. The major bank’s lowest fixed rate for owner-occupiers continues to be its 1 year fixed rate at 2.29% (3.36% comparison rate).

The bank has also increased investor fixed rates today. ANZ’s 2-year investor fixed rates have seen the biggest hike at 0.40%, followed by 3 year fixed rates at 0.30%. ANZ has also increased its 4 and 5 year fixed rates by 0.25% and 1 year fixed rates by 0.20%.

A month ago, Canstar listed 162 fixed rates below 2%, however, this has dropped by -24% to just 123 fixed rates today.

ANZ Owner Occupied Fixed Home Loan (Principal & Interest)

12 Nov 2021

Term

Old Rate

Change

New Rate

New Comparison Rate

Breakfree Package rates

1 Year

1.99%

0.30%

2.29%

3.36%

2 Year

2.09%

0.30%

2.39%

3.32%

3 Year

2.39%

0.40%

2.79%

3.37%

4 Year

2.69%

0.30%

2.99%

3.42%

5 Year

2.89%

0.30%

3.19%

3.50%

Expert Commentary: –

Canstar’s finance expert, Steve Mickenbecker said:-

“Today’s increase to fixed home loan rates is ANZ’s second in three weeks, and they are serious increases of 30 and 40 basis points across all owner occupied fixed terms for principal and interest repayments.

In three weeks ANZ has bumped up its three year fixed rate for owner occupiers by 0.75 percent, with the rapid pace of the increases undoubtedly taking borrowers by surprise.

The increase of the past few weeks means that the horse has bolted on the absolute sweet spot for fixed rates, but this week’s rate increases should nonetheless jolt some borrowers into action.

For any borrower doubting the future direction of interest rates, the ANZ lift to its one year rate is clear confirmation that any rate that is not locked in now will be higher in 12 months time.

Inflation is up in Australia and rocketing up in the US, meaning that there can be only one direction for interest rates, and that is up.

If the banks are encouraging you to take out a variable rate by cutting variable rates and increasing fixed rates, it’s a signal to at least consider locking in a fixed rate for the future three or even five years.

The pace of change is lightning at the moment, such that any borrower who is deciding to fix their rate should ask their bank about “rate lock”. It’s insurance against the bank increasing rates between the time youdecide to fix and the paperwork being done.

Like insurance, there is a cost for a rate lock, but it is a worthwhile investment when you’ll be living with that interest rate for three or five years.”

RateCity.com.au research director, Sally Tindall, said:

“Banks are raising fixed rates at breakneck speed, as the economy rebounds and funding costs increase. Money Bank Pig

What started as minor adjustments by the banks has turned into a significant and sustained move north for fixed rates.

All four big banks have hiked a number of their fixed rates twice in the last month and there are likely to be plenty more to come.

Customers currently in the queue for a fixed rate should consider paying a rate lock fee in this environment.

The number of fixed rates under 2 per cent is dropping rapidly.

While there’s still plenty of choice among short-term rates, there are now just four 3-year fixed rates under 2 per cent and no 4- or 5- year rates under this mark.”

How big four bank fixed rates have changed in the last 6 months

An owner-occupier taking out a $500,000 loan today on the average 3-year fixed big four rates will pay $162 more than someone taking out the same loan six months ago. This assumes principal and interest repayments.

Over the 3-year fixed-rate term, the new customer will pay $9,243 extra in interest than a customer who took out a 3-year fixed rate in May 2021.

Summary of the lowest fixed rates from the major banks

Lowest Fixed Rates from the Major Banks
ANZCommBankNABWestpac*
1 Year Fixed2.29%

3.36% comparison rate

2.34%

4.13% comparison rate

1.99%

4.15% comparison rate

1.99%

3.50% comparison rate

2 Year Fixed2.39%

3.32% comparison rate

2.34%

4.00% comparison rate

2.34%

4.04% comparison rate

1.99%

3.40% comparison rate

3 Year Fixed2.79%

3.37% comparison rate

2.69%

3.97% comparison rate

2.79%

4.03% comparison rate

2.29%

3.38% comparison rate

4 Year Fixed2.99%

3.42% comparison rate

2.89%

3.95% comparison rate

2.89%

3.98% comparison rate

2.69%

3.44% comparison rate

5 Year Fixed3.19%

3.50% comparison rate

3.09%

3.96% comparison rate

3.09%

3.99% comparison rate

2.99%

3.53% comparison rate

Source: www.canstar.com.au – 12/11/2021. Based on owner occupier loans on Canstar’s database, available for a loan amount of $500,000, any LVR and principal & interest repayments; excludes first home buyer only loans. Comparison rate calculated based on a loan amount of $150,000 and a loan term of 25 years. *Lowest rates from Westpac are only available for LVRs up to 70%.

ALSO READ: Interest rates and inflation: where are they heading?

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au


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