Another Big Four bank is cutting interest rates for mortgage holders – as one expert says NOW is the time for homeowners to make a major move

Australia’s mortgage war is heating up as ANZ cuts variable rates, even though the Reserve Bank is not expected to provide any relief until next year.

ANZ has cut home loan rates by 15 basis points, bringing them down to 6.09 per cent for new customers, the lowest among the banking giants for a variable rate.

This Big Four bank has taken action a week after NAB also cut their floating rate, and three months after the Commonwealth Bank provided similar relief to borrowers.

Canstar Data Insights director Sally Tindall said ANZ’s move showed the big banks were fighting for new customers even without the Reserve Bank cutting rates..

“This is the third major bank to cut new variable interest rates for customers in the last three months, despite not making a switch to cash rates,” she said.

“This is confirmation that the big banks are still fiercely competitive.”

While the low rate only applies to new customers, Ms Tindall said existing ANZ customers can still negotiate.

“If you are an existing ANZ customer, please know that the rate reduction will not automatically be applied to your loan, but there is no harm in calling the bank and requesting it,” she said.

Australia’s mortgage war is heating up as ANZ cuts variable rates, even though the Reserve Bank is not expected to provide any relief until next year. The photo shows Sydney city centre

“If you’re a loyal customer, why would you be the one with a higher rate?”

ANZ is also offering cash back to borrowers as it chases market share.

“The bank is also one of the few lenders still offering cashback to refinancers and first home buyers, which is a clear sign that the bank is voraciously hungry for new customers,” Tindall said.

ANZ’s latest move is all the more remarkable with Westpac and NAB not predicting an RBA rate cut until May, while ANZ and CBA are predicting relief in February.

But borrowers who want even lower interest rates, starting with a “five,” should opt for a fixed mortgage rate.

They would be worth it if the RBA barely cut rates in the coming years, but if the Reserve Bank were to make deeper cuts, fixed rate borrowers would have to pay very expensive exit fees if they wanted to switch to a lower variable rate .

ANZ offers a rate of 5.74 percent for those who lock in their loan for two or three years – making it the lowest rate among the Big Four banks.

ANZ and Westpac offer the lowest four-year fixed rate of 5.89 percent.

ANZ has cut its mortgage rate by 15 basis points to 6.09 percent

The 30-day interbank lending market does not expect a rate cut from the RBA until July, and no further rate cut until February 2026 – each in 25 basis point increments.

That also means borrowers will have to wait for official relief from the Reserve Bank’s 13 rate hikes in 2022 and 2023, which took cash rates to a 12-year high of 4.35 percent.

This is despite borrowers already receiving central bank support in the US, UK, Canada, New Zealand and the European Union.

Headline inflation fell to a three-year low of 2.8 percent in September, putting it within the Reserve Bank’s target of 2 to 3 percent.

But the Reserve Bank saw this as the result of one-off $300 electricity rebates set to expire in June next year, along with cheaper petrol prices.

Without these volatile items, underlying inflation was higher, at 3.5 percent.