ANZ to lift home loan rates as funding costs rise


MELBOURNE, AUSTRALIA - MAY 03: People are seen walking past an ANZ Home loan branch on May 03, 2022 in Melbourne, Australia. The Reserve Bank of Australia has today lifted the official interest rate to 0.35 per cent following a meeting today. The rise is the first interest rate increase since November 2010. (Photo by Asanka Ratnayake/Getty Images)

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MELBOURNE, AUSTRALIA – MAY 03: People are seen walking past an ANZ Home loan branch on May 03, 2022 in Melbourne, Australia. The Reserve Bank of Australia has today lifted the official interest rate to 0.35 per cent following a meeting today. The rise is the first interest rate increase since November 2010. (Photo by Asanka Ratnayake/Getty Images)

ANZ will lift home loan rates across all its fixed rate terms.

Its one-year fixed “special” rate for people with more than 20% equity in their homes will jump from 4.85%​ to 5.35%​ on Tuesday, while its two-year rate will jump from 5.35%​ to 5.8%​.

It will also increase its three, four and five-year fixed rates, with its five-year rate jumping from 5.65%​ to 5.99%​.

People with less than 20% equity pay higher interest, and its one-year fixed rate for these people will rise from 5.45%​ to 5.95%​.

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The bank will also lift its term deposit rates. It will lift the rate on its one-year term deposits of $10,000 or more by 0.5% to 3.65%.

It’s highest rate is the 5-year term deposit rate, which will rise to 4.4%.

A spokesperson for the bank said: “With high levels of volatility in global markets and increased inflation pressure domestically, there has been a significant increase in wholesale market rates.”

FINANCE AND EXPEDITURE COMMITTEE

Reserve Bank governor Adrian Orr discusses the risk of a recession in May.

Wholesale rates are the prices the bank paid to borrow money from large institutional investors.

“This has been reflected in changes we’re making to our fixed home loan rates, and our term investment rates to support customers to meet their savings and investment goals,” ANZ’s spokesperson said.

Further changes to loan and deposit rates were possible.

“Interest rates will continue to be reviewed in response to international and local market conditions,” the spokesperson said.

Kiwibank’s team of economists issued its take on current events today, predicting a hard time for householders during the remainder of the year.

“With rising rates, falling house prices and a gloomier global backdrop, growth over the second half of 2022 is looking shakier by the day,” they said.

The Reserve Bank Te Pūtea Matua faced a tough task of tightening monetary policy to curb decades-high inflation, and to do so without crashing the economy into a recession, they said.

This could mean the Reserve Bank’s official cash rate, and home loan rates, may not rise as far as some were expecting.

“House price falls, and the negative wealth effect will ultimately limit the amount of rate hikes. We expect the cash rate to peak at 3.5%, not 4%,” they said.

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