Mortgage rate war reignites as ANZ cuts lowest floating rate

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Australia’s fourth largest lender, ANZ, today cut its lowest floating rate to 2.29%, but only for new customers.

The rate cut comes after the bank raised variable rates by 0.25 percentage points on May 13 for new and existing customers following this month’s cash rate hike.

ANZ’s lowest variable rate

Ready Old tariff New tariff Switch
ANZ Simplicity Plus

2.44%

2.29%

-0.15% points

Source: RateCity.com.au. Rate is for an owner occupier paying principal and interest with an LVR of 70%

ANZ is not the only major bank to cut variable rates for new customers.

Last Tuesday, Westpac raised rates for new and existing customers by 0.25% on the majority of its variable rate loans. However, on its lowest variable rate, it reintroduced a honeymoon rate of just 2.09%, which increases by 0.40 percentage points after the first two years.

CBA also launched Unloan last week, a new digital offering with a variable starting rate of 2.14%.

RateCity.com.au research director Sally Tindall said: “What these cuts at big banks show is that competition in the mortgage market is still alive, despite the RBA hikes.”

“While most variable customers will now face higher refunds, some banks eager for new business are granting exemptions,” she said.

“ANZ’s rate cut comes days after the launch of CBA’s new digital loan and Westpac’s relaunch of its honeymoon loan. Each of these moves puts more heat on the market to keep rates competitive for new customers.

“If you’re on a variable rate that’s going up, don’t just accept your fate. Get a rate reduction by switching to a lender willing to price your business competitively.

“The RateCity.com.au database shows there are still at least 4 lenders offering variable rates below 2% after May’s cash rate hike, including a 1.79% rate from Homestar Finance.

Floating rate customers with ANZ and Westpac in particular should pick up the phone and ask their bank where their loyalty stands.

“If years of paying your bank thousands of dollars in interest isn’t enough to get you a better rate, it might be time to move your business elsewhere,” she said.

Current Lowest Rates of the Big Four Banks

Rate type ABC Westpac NAB ANZ
1 year fixed

2.99%

2.79%

2.99%

3.29%

2 years fixed

3.79%

3.69%

3.99%

3.99%

3 years fixed

4.19%

4.19%

4.49%

4.39%

4 years fixed

4.39%

4.39%

4.79%

4.69%

5 years fixed

4.49%

4.59%

4.99%

4.89%

Lowest variable

2.44%

2.09% for 2 years then 2.49%

2.44%

2.29%

Source: RateCity.com.au. Rates are for homeowners who pay principal and interest. Certain LVR requirements apply.

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