Just a few days before the Reserve Bank of Australia (RBA) is expected to lower interest rates, ANZ Plus, the digital banking arm of one of Australia’s Big Four banks, has raised its variable home loan rates. This is a surprising turn of events. The choice has triggered a lot of issues in the market, with both industry experts and customers condemning and not comprehending it.
Most lenders, including other big banks, are getting ready for the RBA’s expected third cash rate cut of the year. However, ANZ Plus has gone in the opposite direction, raising questions about its strategy, competitiveness, and timing.
ANZ Plus Rate Hike – What Happened?
On Thursday morning, ANZ Plus brought up the variable home loan rates for both owner-occupiers and investors by 0.16 percentage points.
- Owner-occupier loans: Went up from 5.59% to 5.75% a year
- Investment loans: Went up from 5.89% to 6.05% a year
Keep in mind that the price hike only affects new ANZ Plus customers. The change doesn’t affect borrowers who currently hold ANZ Plus or other ANZ home loans.
A Move Against the Flow
The decision has raised eyebrows for one main reason: almost 20 other lenders have recently lowered at least one fixed mortgage rate, which means they think the RBA is very likely to lower rates.
ANZ Plus’s rate hike, on the other hand, seems tone-deaf to the way the market is shifting right now. Many homeowners are looking into refinancing options and trying to find better deals. ANZ Plus’s move could very well drive potential customers to competitors who offer better rates.
Industry Response – Canstar Speaks
Sally Tindall, Canstar’s Director of Data Insights, called the move:
- A reminder that “some banks still want to protect their margins.”
- “Strange,” especially so close to an RBA decision.
- A possible sign that ANZ Plus is backing off from its previous aggressive pricing stance.
Tindall also directed out that the removal of cashback offers and the rate hike are signs that ANZ may be moving its mortgage strategy back to its main brand and away from its digital-only product.
Change of strategy or mistake?
When ANZ Plus entered the mortgage market in 2023, it was meant to be the future of ANZ’s home loan distribution model. It offered competitive rates and a digital-first experience.
Now that the bank is increasing rates, it might be decreasing its own growth, just like the mortgage market is expected to get busier because rates might go down.
Tindall said that raising rates before a wave of refinancing could hurt ANZ Plus’s ability to compete and also show that it is not as interested in its digital lending channel.
Comparing Rates – ANZ vs. the Market
With its new rates, ANZ Plus is now ahead of many of its competitors in both fixed and variable offerings. Canstar’s database says that:
- 35 lenders now have at least one variable rate that is less than 5.50%.
- Some lenders, like one that offers 4.99%, are already below 5%.
There are 17 lenders who offer fixed rates below 5%, such as:
- Macquarie
- The Greater Bank
- The Bank of Queensland
ANZ Plus is likely to become less prevalent in the short term, especially with borrowers who are concerned about rates, since there are more competitive options available.
RBA Rate Cut Coming Soon
The RBA is going to meet early next week, and most experts think that another cut in the cash rate is coming soon:
- All four of the biggest banks expect a 0.25% drop.
- The market thinks there is a 51% chance of a bigger 0.50% cut, which would lower the cash rate to 3.35%.
Because so lots of individuals think this way, other banks have lowered their fixed rates on purpose to get new customers before the rate cut goes into effect.
NAB Does the Opposite
NAB (National Australia Bank) has cut fixed mortgage rates, which is the opposite of what ANZ Plus did. This is probably since they expect the RBA to do something soon:
- 1–2 year fixed rates: down by 0.25 percentage points
- Fixed rates for 3 to 5 years have been cut by 0.10 percentage points.
- These changes affect both people who live in their homes and people who invest in them.
The two-year fixed rate from NAB is now 5.19%, which makes it the best deal among the Big Four banks.
Sally Tindall has more to say about NAB’s move
Tindall praised NAB’s proactive move and said:
NAB has come out swinging before the RBA meeting, cutting fixed rates by up to 0.25 percentage points and beating its big bank competitors.
She said that fixed rates aren’t the best choice for a lot of borrowers, but these changes are a clear sign that banks are getting ready for the RBA to raise rates again.
How much can you save?
The numbers make it very clear for those who are thinking about their options:
Savings from a 0.25% rate cut:
- $600,000 mortgage → save about $90 a month
- $1 million mortgage: save about $150 a month
Borrowers are more likely to look for the best deal now that refinancing activity is expected to rise after the RBA decision. This makes pricing more important than ever.
What kind of fixed or variable plan is best for you?
Variable rates give you a little flexibility, but they also mean you could see rates go up in the future. On the other hand, fixed rates are certain, but they may be higher depending on when you get them.
With more than 20 lenders lowering fixed rates, borrowers who want to protect themselves against economic uncertainty or plan around fixed budgets may want to lock in now.
Join the “Cashflow Tax” Debate
While speculation about mortgage rates is going on, another big topic is starting to come up: the Productivity Commission’s proposed “cashflow tax.”
What is it?
- A new kind of tax that will help Australia’s economy grow again
- Aims to replace or add to regular income and business taxes
Who might it affect?
- People in Australia every day
- People who invest
- Accounts for retirement
The Treasurer asked for big ideas for economic reform, and this one has gotten a lot of attention, even though it is still just a proposal.
⚠️ Possible Problems with the Cashflow Tax – Not sure who will be taxed and how
- Effect on small businesses, individual investors, and savings for retirement
- Risk of changing where and how Australians put their money to work
- Some people have called the proposal a “grenade” in Australia’s tax system because it could break up long-standing financial structures.
What should investors and borrowers do now?
The market is changing because ANZ is raising rates, NAB is lowering rates, and the RBA is likely to lower the cash rate.
These are a few things that homeowners and investors might want to think about:
For Borrowers:
- Check your mortgage, especially if your fixed term is about to end.
- Look at different lenders; many of them now offer better rates than big banks.
- Think about refinancing to a lower fixed or variable rate.
For Investors:
- Keep a close eye on RBA decisions
- If the cash flow tax becomes popular, you should look at super and managed funds again.
- Keep your investments in different types of assets to protect yourself from changes in taxes or interest rates.
One Bank Goes Against the Grain, But What Does It Cost?
As ANZ Plus raises rates against what the market thinks will happen, it could lose more customers to competitors. NAB is the first bank to cut fixed rates, and other banks are following suit. This gives borrowers a lot of choices.
The next week will be very important. The RBA is looking at economic data, global pressures, and market sentiment to decide what to do with Australia’s interest rates in the future.
The message is clear, whether you’re a homeowner, an investor, or just reading the news: the market is shifting, so make sure you’re changing with it.
