ANZ cuts home loan rates to capture market share

ANZ has slashed its home loan rates in a bid to capture market share in the competitive home loan market.

14/11/2018: Generic picture of ANZ bank branch and logo. Hollie Adams/The Australian

ANZ Bank is now offering the lowest home loan interest rates among the big four banks, in a bid to capture market share as recovery in the residential property market gains pace.

The bank on Friday slashed rates on its fixed owner-occupier and investor home loans between 10 basis points and 86bps, with a two-year fixed principal and interest owner-occupied loan carrying a rate of 2.68 per cent.

The cuts come after Commonwealth Bank made similar cuts last week, and is now offering a two-year fixed rate of 2.99 per cent on equivalent owner-occupied loans.

Westpac and NAB are both offering two-year fixed rates of 2.88 per cent on owner-occupied, principal and interest loans.

RateCity research director Sally Tindall said ANZ’s decision to offer some of the lowest rates on the market is an attempt to “kick start” the bank’s home loan books, which experienced an “incredibly” sluggish 2019.

The new rates also see interest-only loan repayments for owner-occupiers cut by between 11bps and 0.26bps, with the five-year rate now at 4.03 per cent.

Five-year fixed principal and interest owner occupied loans now carry a rate of 3.23 per cent.

Ms Tindall said ANZ was now competing with low-rate lenders and the move will likely prompt Westpac and NAB to think about slashing home loan rates.

“The other big banks are likely to consider cutting their fixed rates further in order to remain competitive,” she said.

“NAB in particular are traditionally competitive among the big four banks. The next move could come from them.”

According to RateCity data, Westpac subsidiary St George Bank currently offers the lowest five-year fixed rate at 2.84 per cent.

Owner occupiers have driven ANZ’s recent growth in home loans, which printed at a three-month annualised rate of 0.5 per cent in the December quarter – its first quarterly growth since mid-2018.

Meanwhile, ANZ has dropped investor rates by between 21bps and 0.66bps for principal and interest loans, with its five-year fixed rate now at 3.43 per cent.

Investors paying interest only will see repayments cut by 31bps to 86bps, with a five-year fixed rate at 3.53 per cent.

The cuts come as the Reserve Bank’s cash rate sits at a record-low 0.75 per cent.

ANZ’s Breakfree home loan product rates have also dropped, with eligible customers able to borrow on a five-year fixed rate at 3.08 per cent for owner occupied loans and 3.28 per cent on investment loans.