October 28th 2024.
Recently, ANZ, one of the four major banks, has once again made changes to its fixed mortgage rates. Just a few weeks ago, ANZ was the last of the big four to lower its fixed rates, but now they have decreased the interest rates on certain fixed home loans. However, this offer is not available to everyone. Only borrowers who are considered low-risk are eligible for the new lower rate. On the other hand, high-risk customers have seen an increase in their rates.
For those who are owner-occupiers and have a loan-to-value ratio (LVR) of 80 per cent or less, which means they have a deposit of 20 per cent or more, ANZ has lowered its fixed rates by 0.25 per cent. This is because these borrowers are considered to be safer by financial institutions. On the other hand, for borrowers with an LVR above 80 per cent, the same rates have been increased by 0.15 per cent.
According to Rachel Wastell, a personal finance expert at Mozo, ANZ's decision to cut fixed rates again seems to be a strategic move to attract lower-risk borrowers in an uncertain economic climate. While this is good news for those with strong equity, it's not looking great for borrowers with an LVR above 80 per cent. This is because it is already challenging for them to secure loans in the current market due to the high cost of lenders mortgage insurance. The removal of the 15-basis-point discount for higher LVR borrowers by ANZ adds another barrier for them.
This decision by ANZ comes just two weeks after they had already cut their fixed rates. According to Wastell, this shows where their priorities lie. It is clear that they are focused on attracting lower-risk borrowers. The major lenders have been lowering fixed rates since August, as they try to entice customers with the expectation of a drop in the official cash rate in the coming months. However, the exact timing of this rate cut remains a mystery.
Governor Michele Bullock has repeatedly stated that a rate cut is not on the immediate horizon. However, she has also acknowledged that the central bank will respond accordingly to economic data. On Wednesday, the Australian Bureau of Statistics will release consumer price index data for the September quarter. This is a crucial set of figures that will give Bullock and her board an updated view of inflation. It is expected that the data will show inflation is either back in or close to the Reserve Bank's target range of 2-3 per cent, thanks to the federal government's energy bill rebates and falling fuel prices.
According to Treasurer Jim Chalmers, the lowest inflation figures in years do not mean that the cost-of-living pressures have disappeared. He stated that although progress has been made in the fight against inflation, the pressure is still present. He also mentioned that the new numbers to be released on Wednesday will show the progress that has been made. However, he also acknowledged that this does not mean that the pressure has suddenly eased or lifted.
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