ANZ and Macquarie Bank are doing their own thing in Australia’s home loan scene.
Last week, ANZ chopped its two and three year fixed rates by up to 0.10% points, making their cheapest deal 6.29% for a two year lock.
It’s even cooler with Macquarie; they dropped their rates by an impressive 0.45%points. Their best offer is now at 6.09% for a three year fix.
This sets them apart from the Big Four banks. NAB jacked up its fixed rates by 0.15% points, and Westpac bumped some of theirs by 0.05 points earlier in the week.
Canstar’s Sally Tindall called out how ANZ and Macquarie are going against the grain. So yeah, these moves really stick out in a market where most lenders are actually increasing their rates.
“ANZ and Macquarie have today gone the other way, cutting fixed home loan rates at a time when most of the market is still going up,” Tindall said.
While the cuts are small, they will leave Macquarie and ANZ ahead of their big bank rivals.
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But the mixed signals from large lenders underscored the uncertainty of the economic outlook, she added.
Where the banks stand on rates
The divide in fixed rate pricing shows a bigger debate within the Big Four’s economics teams about where interest rates are headed.
ANZ and Commonwealth Bank think the Reserve Bank won’t increase cash rates this year.
NAB, however, forecasts one more 0.25% point rise in August, while Westpac is calling for two extra hikes, both in August and September.
Variable rates are tied to the Reserve Bank’s cash rate, but fixed rates are affected by other factors like wholesale funding costs.
Lenders set these based on where they think rates are going.
If a bank believes the hiking cycle is done, it makes sense to drop fixed rates. Meanwhile, a bank expecting tighter rates would keep them the same or raise them.
With the Reserve Bank’s next meeting on June 16, most economists expect the cash rate to stay steady at 4.35%.
They think a pause after three straight increases this year will allow time to see how those changes ripple through the economy.
Economist Saul Eslake mentioned the Reserve Bank’s reason to wait for June quarter inflation data before taking action again.
People thinking rate hikes are over might see ANZ and Macquarie’s offers as appealing, thanks to the difference from competitors.
However, fixing rates means giving up possible benefits from future cuts to the cash rate.
Inflation is still high, and the Middle East conflict drives up energy costs even more.
So, the RBA feels unsure if price growth will get back to their two to three percent target soon.
This uncertainty leads everyone households, lenders and economists to look at the same info but draw very different conclusions about what’s coming next.
