Major bank to ask more of investors

By Huntley Mitchell

A big four bank has announced it will make significant adjustments to its fixed-rate products, with investors bearing the brunt of the changes.

ANZ has announced that it will reduce fixed rates for owner-occupiers by as much as 40 basis points, while simultaneously increasing rates for investors by up to 30 basis points.

Effective Tuesday 28 July, the bank’s four-year fixed rate for owner-occupiers will be cut by 40 basis points to 4.74 per cent. Meanwhile, its two-year and three-year rates will be reduced by 30 basis points to 4.44 per cent and 4.54 per cent respectively. The bank’s one-year fixed rate for owner-occupiers will be trimmed by 10 basis points, also to 4.54 per cent.

However, in a sign of APRA’s intervention triggering changes to the property investment landscape, ANZ will increase fixed rates for investors. One-year, two-year, three-year and five-year fixed rates for investors will all increase by 30 basis points, taking its one-year rate to 4.94 per cent, its two-year and five-year rates to 5.04 per cent, and its three-year rate to 5.14 per cent.

Effective 10 August, ANZ also announced that its variable residential property loan index rate will rise by 27 basis points to 5.65 per cent, as part of its strategy to manage investor lending growth targets and in response to changing market conditions.

“Although interest rates for residential property investors are at very low levels historically, the decision to raise interest rates for residential investment lending has been difficult but necessary in the current environment,” ANZ Australia chief executive Mark Whelan said.

“It allows us to balance the mix of our lending between owner-occupied and investment lending, as well as the impact of changing market conditions. This includes a decision to cut fixed rates for new owner-occupied home lending.

“This is a considered decision that takes into account our customers’ position and the criteria when we look at setting rates, including our competitive position, our regulatory obligations and the state of the residential property market.”

ANZ has also recently introduced a series of other measures recently to improve the mix between investor and owner-occupied lending. These include reducing interest rate discounts, increasing the required deposit to at least 10 per cent and increasing interest rate sensitivity buffers for residential investment lending.


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