ANZ has become the last of the Big Four banks to slash its fixed mortgage rates with generous relief for borrowers expected next year.
The banking giant on Friday slashed its three-year fixed rates by 60 basis points to 5.99 per cent, as two-year fixed rates were trimmed by 55 basis points to the same level.
‘s Big Four banks are now all offering three-year fixed mortgage rates starting with a ‘five’ for borrowers with a 20 per cent deposit, following ANZ’s latest move.
This is occurring as the financial markets predict four Reserve Bank rate cuts in 2025.
RateCity money editor Laine Gordon said ANZ had caved in to its competitors in a sign other lenders were likely to also cut their fixed rates.
‘ANZ is the last big four bank to cut a fixed home loan rate below 6 per cent, but the bank has succumbed to competition,’ she said.
‘The number of lenders joining the “under six” club is quickly growing.’
More than 70 lenders now offer a fixed rate starting with a ‘five’, RateCity data showed.
The lowest fixed rates offered by the Big Four banks, however, are still higher than Abal Banking’s market-leading 5.75 per cent variable rate.
This means customers on a lower variable rate would benefit should the RBA slash rates by 100 basis points, as predicted, without providing more relief in 2026.
The Big Four banks still only offer variable rates starting with a ‘six’, with ANZ now offering the lowest floating rate of 6.14 per cent.
This is slightly lower than the Commonwealth Bank’s 6.15 per cent level and well below NAB’s 6.79 per cent and Westpac’s 6.44 per cent.
The smaller players are still offering lower fixed rates than the Big Four banks.
SWS Bank has the lowest fixed rate of 4.99 per cent, which means a borrower now on a variable rate starting with a ‘six’ won’t miss out if the RBA cuts rates four times next year.
ANZ: Two and three-year fixed rates of 5.99 per cent; 6.14 per cent variable
CBA: Three-year fixed rate of 5.89 per cent; 6.15 per cent variable
WESTPAC: Two, three, four and five-year fixed rates of 5.89 per cent; 6.44 per cent variable
NAB: Three-year fixed rate of 5.89 per cent; 6.79 per cent variable
Macquarie Bank is offering two, four and five-year fixed rates of 5.39 per cent.
The 30-day interbank futures market is now expecting the Reserve Bank to starting cut rates in March from an existing 12-year high of 4.35 per cent.
It is expecting four cuts in 2025 that would take the cash rate back to 3.35 per cent for the first time since March 2023 – partially unwinding the RBA’s 13 increases in 2022 and 2023.
This means borrowers who fix their mortgage rate now for several years would be liable for a hefty break fee in the thousands should they change their mind and ask their bank to switch them to a lower variable rate.
New Zealand has already cut rates twice this year, with central banks in the US, UK, Canada and the European Union also easing monetary policy in 2024.
But Westpac chief economist Luci Ellis, a former assistant governor at the Reserve Bank of , said central bank interest rates were likely to be higher in the 2020s than they were in the 2010s.
‘Real rates have trended down for decades, but a very long-term view supports our thesis that rates will average higher in future than they did pre-pandemic,’ she said.