ANZ raises fixed mortgage rates, variable rates back in fashion

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ANZ held out longer than other major banks, but on Friday it raised fixed rates by 20 to 40 basis points.

A wide variety of rates have been raised, including breakfree packages and unpackaged loans, for investors and homeowners.

Some of the more notable changes included:

  • Fixed Residential Breakfree 1 Year 80%: Increase of 30 basis points to 2.29% per year (comparative rate of 3.36% per year*)
  • Breakfree Residential Fixed 3 Years 80%: Increase of 40 basis points to 2.79% per year (comparative rate of 3.37% per year*)
  • Investment Breakfree Fixed 1 year 80%: Increase of 20 basis points to 2.59% per annum (comparative rate of 3.91% per annum*)
  • Breakfree Fixed Investment 3 Years 80%: Increase of 30 basis points to 2.99% per annum (comparative rate of 3.85% per annum*)

On Thursday, NAB raised its fixed rates, following Westpac and CBA which increased last week.

The big banks also raised rates on fixed-rate loans in September-October.

However, the big four banks weren’t the only ones to raise rates, with Bank of Queensland, Bendigo and Adelaide Banks, and Tic:Toc following on Friday morning.

The bulk of the rate hikes applied to home loans to investors and homeowners, fixed between one and five years, rose by 11 to 50 basis points.

Variable rates are back in fashion

The declines did not stop for variable rates, however, continuing the trend observed in recent weeks.

On Friday, the Bank of Queensland cut home loans for investors and homeowners by up to 30 basis points.

BoQ-owned ME Bank also followed suit, cutting 9 to 14 basis points.

On Thursday, ING lowered its variable rates by 10 to 20 basis points.

Why is this happening then?

This is basically the opposite of what was seen in 2020, when variable rates remained largely untouched and fixed rates took all the attention.

This was due to banks, especially large ones, tapping into the RBA’s term funding facility.

That’s now over and since then wholesale funding rates – called “swap” rates – have skyrocketed (chart below), which is why banks are increasing fixed mortgages again.

What could happen is largely a return to the status quo. Before the pandemic, fixed loans accounted for less than a fifth of new mortgages, but now account for almost half, but this percentage is slowly returning to “normal”.

Anyone with a slightly cynical mind might also think that banks are enticing borrowers back to variable rates because they’re easy to raise whenever they want – like the RBA raising its cash rate before 2024.

Having almost half of the mortgage portfolio at a fixed rate does not allow them this flexibility.

Fixed rates up sharply: ANZ

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