Fixed-rate home loan war heats up
(16 August 2011 – Australia) The fixed-rate home loan price war is heating up as the banks take advantage of declining wholesale funding costs to offer lower lending rates.
ANZ yesterday announced new two and three-year fixed-rate home loans of 6.44 percent - undercutting rates announced by Commonwealth Bank and Westpac last week by 15 and 35 basis points respectively. ANZ also cut rates for fixed loans of one, four and five years.
But variable loans are unlikely to change until the Reserve Bank cuts the official cash rate.
While wholesale markets are pricing in at least one cut before the end of the year, outgoing CBA chief executive Ralph Norris yesterday said inflation was likely to keep the official cash rate at 4.75 percent.
''The underlying Australian economy is in pretty sound shape,'' Mr Norris told ABC television.
''If the Reserve Bank is focused and continues its focus, which is obviously the object of monetary policy, on inflation, then it's hard to see that there would be substantial cuts.''
ANZ's new fixed rates are available only to new customers or existing customers with variable-rate mortgages who want to switch to fixed rates.
''Circumstances have combined which mean it is cheaper for us to fund a two or three-year mortgage than it is for us to fund a variable-rate mortgage,'' said ANZ's Australian chief executive, Phil Chronican.
But variable loans are unlikely to change until the Reserve Bank cuts the official cash rate.
While wholesale markets are pricing in at least one cut before the end of the year, outgoing CBA chief executive Ralph Norris yesterday said inflation was likely to keep the official cash rate at 4.75 percent.
''The underlying Australian economy is in pretty sound shape,'' Mr Norris told ABC television.
''If the Reserve Bank is focused and continues its focus, which is obviously the object of monetary policy, on inflation, then it's hard to see that there would be substantial cuts.''
ANZ's new fixed rates are available only to new customers or existing customers with variable-rate mortgages who want to switch to fixed rates.
''Circumstances have combined which mean it is cheaper for us to fund a two or three-year mortgage than it is for us to fund a variable-rate mortgage,'' said ANZ's Australian chief executive, Phil Chronican.
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