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Major bank announces interest rate changes

ANZ has announced it will reduce fixed interest rates for new owner-occupied loans, and increase interest rates on its residential investment property loans.

The big four bank has slashed fixed rates for new owner-occupied loans by up to 0.40%, bringing the four-year fixed rate to 4.74% per annum. The three-year and two-year rates will drop by 0.30% to 4.54% and 4.44% per annum respectively, and the one-year rate will decrease by -0.10% to 4.54% per annum. The new rates are effective Tuesday 28 July 2015.

ANZ says the variable Residential Investment Property Loan will rise by 0.27% to 5.65%, while fixed rates for new Residential Investment Lending will increase by up to 0.30% – effective Monday 10 August 2015.

According to ANZ, the increases to interest rates for residential investment property loans is in response to changing market conditions as well as to manage investor lending growth targets as per APRA’s submission into home ownership that “all ADI’s [Authorised Deposit-taking Institutions] with material investor loan portfolios have committed to operate at or below APRA’s 10 per cent benchmark …”

ANZ CEO Australian Mark Whelan says the decision to raise interest rates for residential investment lending was difficult but necessary in the current environment.

“It allows us to balance the mix of lending between owner-occupied and investment lending as well as the impact of changing market conditions. This includes a decision to cut fixed rates for new owner-occupied home lending.”

Whelan says the decision takes into account ANZ customers’ positions and its competitive position, as well as regulatory obligations and the current residential property market.

ANZ highlights also introduced a series of other measures recently to improve the mix between investor and owner occupied lending.

“For residential investment lending, these include reducing interest rate discounts, increasing the deposit required to at least 10% and increasing interest rate sensitivity buffers,” a statement from the bank concludes.

Published on: Friday, July 24, 2015