ANZ takes big four crown with new 3.65% home loan rate
Article by Tom Watson
You would be hard pressed to have missed the overwhelming narrative of ongoing rate hikes from a swathe of home loan lenders over the last two months, so today’s announcement from ANZ has certainly caught many by surprise.
ANZ has slashed the ongoing variable rate on its Simplicity PLUS home loan offer by a whopping 34 basis points, from 3.99% to 3.65% (3.69% comparison rate*).
The offer, which does not charge any upfront or ongoing fees, is available to new owner occupier applicants willing to make principal and interest repayments on loan amounts of at least $50,000 with a maximum LVR of 80%.
ANZ’s new rate is now the lowest basic ongoing variable home loan offer among the big four banks, and considerably lower than the average variable rate currently in the Mozo database of 4.36%.
While surprised by the move, Mozo Product Data Manager, Peter Marshall, said that ANZ’s rate cuts were more strategic than a real intention of offering lower rates to a broad range of customers.
“Because the cut only applies to its basic product which doesn’t offer an offset account, many people may not be interested in it - particularly first home buyers who can’t meet the minimum 20% deposit requirement.”
“To some extent this move is ANZ playing catch up with the other big banks, because Westpac and the Commonwealth Bank already have rates that are very near the new offer.”
ANZ also made a number of changes to its fixed rate offers for both owner occupiers and investors - chief among these a 24 basis point cut to the Simplicity PLUS 2 year fixed rate home loan, which now sits at 3.75% (4.92% comparison rate).
Bucking the trend (for now)
While prospective ANZ customers will no doubt be happy with the changes, there’s been little to celebrate of late for the majority of mortgage holders in Australia.
In fact, the most recent Mozo Banking Roundup reported that a total of 18 lenders in the Mozo database had increased rates for most of their home loan customers in the last two months.
And according to Marshall, today’s move doesn’t take the possibility of future rate rises off the table on ANZ’s other home loan products, even on its Simplicity PLUS offer.
“I would expect that people taking up the Simplicity PLUS rate offer now should be prepared for at least some level of rate increase in the next six months,” he said.
How much could the rate cut save you?
So for new ANZ customers looking at the variable rate Simplicity PLUS home loan deal, how much could they expect to pay on their monthly repayments following the rate cut?
According to the Mozo home loan repayments calculator, an ANZ customer making principal and interest payments on a $300,000 over a 30 year period would have made monthly repayments of $1,431 on the previous 3.99% rate, as well as $214,986 in total interest over the life of the loan.
However, on the new 3.65% offer, monthly repayments would drop to $1,372 and the amount of total interest new customers could expect to pay over the life of the loan would fall to $194,056 - over $20,000 less.
*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.