ANZ delivers good news to Australians with a mortgage

ANZ has become the latest major bank to slash fixed mortgage rates in a sign of more relief to come.

The Big Four bank has cut its fixed mortgages rates for the second time in three weeks, ahead of the Reserve Bank’s November meeting. 

It has cut fixed rates by 25 points for borrowers with a 20 per cent deposit.

ANZ’s mortgage rates, fixed for two to five years, are now all below 6 per cent. It now offers the lowest mortgage rate of 5.74 per cent – fixed for two and three years – among the Big Four banks.

Canstar data insights director Sally Tindall said competition among the banks was heating up, with economists expecting the Reserve Bank of Australia to slash rates next year.

‘This strategic play from ANZ means the bank now offers the lowest fixed rate out of the majors as competition in this space continues to push rates south,’ she said.

SWS Bank offers the lowest rate overall, of 4.99 per cent, also with a three-year fixed term. 

The 30-day interbank futures market is expecting the RBA to cut rates three times next year.

Earlier this month, it was expecting four rate cuts.

But if a borrower now on a variable rate fixed their mortgage too soon, they could be missing out on more generous relief should the RBA keep on easing monetary policy. 

An ANZ borrower now on a 6.14 per cent variable rate who fixed at 5.74 per cent, for three years, would now only get a saving of 40 basis points.

That would mean a monthly repayments saving of $163 on an average, $636,208 mortgage compared with staying on a variable rate.

Should the RBA cash rate fall by 75 basis points in 2025, they would be missing out on 35 basis points worth of relief by fixing now at ANZ’s latest, low fixed rate.

Canstar data insights director Sally Tindall said competition among the banks was heating up, with economists expecting the Reserve Bank of Australia to slash rates next year

That is the gap between the Reserve Bank’s three-quarters of a percentage point relief, as predicted, and a 40 basis point reduction for an ANZ borrower switching now from a variable to a low, fixed rate. 

Put another way, someone fixing too early would miss out on $140 worth of savings, adding up to $1,680 a year compared with someone who stayed on a fixed rate and benefited from the forecast RBA rate cuts.

Borrowers wanting to get out of a fixed rate to take advantage of falling RBA rates are liable for a break fee in the thousands of dollars, because this is considered a breach of contract. 

Inflation data for the September quarter is due out on Wednesday.

The Commonwealth Bank, Australia’s biggest home lender, is predicting headline inflation easing to 2.9 per cent, down from an annual level of 3.8 per cent in the June quarter.

This figure covers volatile items like petrol prices falling and the federal government’s one-off $300 electricity rebates.

But underlying inflation, excluding volatile items, was still expected to be above the RBA’s 2 to 3 per cent target.

CBA is expecting the trimmed mean measure of inflation to fall to 3.4 per cent, down from 3.9 per cent.