The ANZ bank has surprised home borrowers by hiking variable mortgage rates – despite expectations of more rate cuts from the Reserve Bank.
The Big Four bank bucked the trend by raising both owner-occupier and investor loan rates by 16 basis points.
This will see ANZ’s lowest owner-occupier variable rate rise to 5.75 per cent as the investor loan rate climbed to 6.05 per cent.
The move was made despite near universal expectations of another rate cut on August 12, followed by two more cuts by Christmas.
ANZ is also discontinuing its $2,000 cashback offer.
Canstar data insights manager Sally Tindall said ANZ’s counter hike showed margins were now more important than winning over new customers.
‘ANZ’s hike to its lowest variable rate is a reminder some banks are still looking to protect margins,’ she said.
‘It’s an unusual move just days out from a board meeting that could deliver a cut, but it shows how some banks don’t follow the tide. Let’s just hope it’s not contagious.’
The ANZ hike comes just a week after underlying inflation – the RBA’s preferred measure – fell to 2.7 per cent in the June quarter, or a level closer to the mid-point of the Reserve Bank’s two to three per cent target.
RBA deputy governor Andrew Hauser hinted this would make a rate cut on August 12 more likely.
‘The data yesterday were very welcome,’ he said.
‘We were looking for more evidence that inflation was moving sustainably back to the mid-point, and we’ve had another piece of that jigsaw yesterday.’
Headline or consumer price index inflation fell again to just 2.1 per cent, the lowest since March 2021.
Both numbers have firmed up the prospect of a rate cut next week, that would see the cash rate fall back to 3.6 per cent for the first time since May 2023 and cut monthly repayments by $100 on an average $660,000 mortgage.
The futures market, however, only regards a cut next week as a 51 per cent chance, despite the lower inflation.
Financial markets are now more wary after the RBA in July left the cash rate on hold at 3.85 per cent, despite economists at every major bank forecasting a cut.
But they are still expecting three more rate cuts this year, that would see the RBA cash rate fall back to 3.1 per cent for the first time since February 2023.