ANZ leaves rates steady in first solo review
(16 January 2012 – Australia) ANZ had its first solo monthly review of mortgage rates last Friday, leaving the standard variable rate steady at 7.3 percent a year.
The ANZ bank passed along the Reserve Bank of Australia (RBA)’s December interest rate cut in full but warned at the time that its costs were still rising and that future mortgage and small business lending rates would be announced on the second Friday of each month.
ANZ bank has been keen to break the connection in consumers’ minds between official Reserve Bank rate moves and the amount of interest charged by the banks. Banks say the rates should be subject to pressures on wholesale funding markets and other costs.
"By reviewing key variable lending rates each month we can more accurately reflect the sustained changes in funding costs we incur through the interest we pay to customers for their deposits and to investors in wholesale money markets," said ANZ Australia chief Philip Chronican.
"It helps us to contribute to an informed debate about how we fund our customers’ loans and the effects of the continuing global financial crisis on Australia, particularly the significant economic instability which currently exists in Europe."
So far, the other big three banks – Commonwealth Bank Australia (CBA), National Australia Bank (NAB) and Westpac - have made no indication of following the ANZ's lead on separate interest rate announcements. The RBA returns to its regular rate decisions on the first Tuesday of each month in February following its traditional January break.
ANZ said it uses five criteria to determine interest rates, including ensuring attractive returns for depositors, cost of funds, and the bank's overall competitive position.
The cost of wholesale funding covers the amount of interest ANZ pays on funds from money markets, the bank said.
'The cost of these funds has become more volatile and expensive since the (global financial crisis) and has been elevated in recent months as a result of the European debt crisis,' said Chronican.
ANZ bank has been keen to break the connection in consumers’ minds between official Reserve Bank rate moves and the amount of interest charged by the banks. Banks say the rates should be subject to pressures on wholesale funding markets and other costs.
"By reviewing key variable lending rates each month we can more accurately reflect the sustained changes in funding costs we incur through the interest we pay to customers for their deposits and to investors in wholesale money markets," said ANZ Australia chief Philip Chronican.
"It helps us to contribute to an informed debate about how we fund our customers’ loans and the effects of the continuing global financial crisis on Australia, particularly the significant economic instability which currently exists in Europe."
So far, the other big three banks – Commonwealth Bank Australia (CBA), National Australia Bank (NAB) and Westpac - have made no indication of following the ANZ's lead on separate interest rate announcements. The RBA returns to its regular rate decisions on the first Tuesday of each month in February following its traditional January break.
ANZ said it uses five criteria to determine interest rates, including ensuring attractive returns for depositors, cost of funds, and the bank's overall competitive position.
The cost of wholesale funding covers the amount of interest ANZ pays on funds from money markets, the bank said.
'The cost of these funds has become more volatile and expensive since the (global financial crisis) and has been elevated in recent months as a result of the European debt crisis,' said Chronican.
Subscribe