A major bank has slashed its fixed mortgage rates ahead of a widely anticipated Reserve Bank rate cut next week.
ANZ has trimmed its one-to-five-year fixed rate mortgages by up to 35 basis points and changed its forecasts to have a July 8 rate cut.
It has also joined the Commonwealth Bank, Westpac and NAB in forecasting another rate cut next week to the existing 3.85 per cent cash rate.
Ironically, ANZ was the only Big Four bank expecting the Reserve Bank of Australia (RBA) to next move again in August instead of July when it initially announced cuts to its fixed rate mortgages on Wednesday morning.
Hours later, it updated its forecasts.
ANZ has now slashed three-year fixed rates by 35 basis points to 5.34 per cent.
The bank cut its one-year fixed rates by 20 basis points to 5.29 per cent, as two-year fixed rates also fell by 0.2 percentage points to 5.19 per cent.
ANZ has cut its four and five-year fixed rates by 10 basis points to 5.74 per cent, which is still higher than its lowest variable rate of 5.59 per cent.
A major bank has slashed fixed mortgage rates ahead of an expected Reserve Bank rate cut next week (pictured, shoppers at Sydney’s Pitt Street Mall)
Ironically, ANZ was the only Big Four bank expecting the Reserve Bank of Australia (RBA) to next move again in August instead of July (stock image) when it initially announced cuts to its fixed mortgage rates
ANZ’s head of Australian economics Adam Boyton cited weak retail trade data, released on Wednesday, to change his forecasts to have a rate cut next Tuesday, which would also be occurring a day before Donald Trump’s 90-day tariff pause expires.
‘Given today’s data showing a weak six-month trend in retail sales, the most recent reads on consumer confidence showing the prior uptrend remains stalled and ongoing uncertainty around US trade policy as we approach the expiry of the tariff pause, we now expect the RBA to cut the cash rate by 25 basis points at its July meeting,’ he said.
‘That decision will likely reflect the RBA’s monetary policy board concluding that a 25 basis point reduction in the cash rate in July is the path of least regret.’
Financial markets are expecting the RBA to cut rates next week by 25 basis points, taking them to 3.6 per cent for the first time since May 2023.
More relief next week would see a borrower with an average $660,000 mortgage save another $106 on monthly repayments.
The 30-day interbank futures market is also expecting more relief in July, August and November, which would see the Reserve Bank cash rate fall to 3.1 per cent by the end of 2025 for the first time since February 2023.
Should those RBA rate cuts materialise, an ANZ borrower now on a 5.59 per cent variable rate would see their mortgage rate fall to 4.84 per cent, assuming they pass on in full the relief from the Reserve Bank.
This would be much lower than ANZ’s lowest fixed rate of 5.19 per cent, which is the lowest for two years among the Big Four banks.
Canstar data insights director Sally Tindall (pictured) said ANZ was bracing for a possible July rate cut and wanted to grab a bigger share of fixed-rate borrowers
Non-bank lenders offer the lowest fixed rate mortgages, with Easy Street charging just 4.95 per cent over two years and Pacific Mortgage Group offering a one-year fixed rate of 4.99 per cent.
Canstar data insights director Sally Tindall said ANZ was bracing for a possible July rate cut and wanted to grab a bigger share of fixed-rate borrowers.
‘The bank is factoring in the possibility of further cash rate cuts, which could be coming down the line as soon as next week,’ she said.
‘ANZ could also be looking to shore up its loan book by locking in more customers on fixed-rate deals.’
ANZ’s own half-year results for the six months to March showed fixed rates made up just three per cent of its residential mortgage book.
The banks can charge hefty exit fees in the thousands of dollars if a borrower wants to break a fixed-term contract and switch to a lower variable rate to take advantage of RBA rate cuts.
‘This means the remaining 97 per cent on variable rates are free to move at any time without major penalties,’ Ms Tindall said.
‘While ANZ’s fixed rates are streaks ahead of the other big banks, particularly on shorter terms, they’re still a far cry from the lowest fixed rates in town, with a total of 13 different lenders now offering at least one fixed rate under five per cent.
‘If you’re looking to lock in your rate, don’t go aiming for one that starts with a five or a six. You should be looking in the fours.’
The Commonwealth Bank and Westpac changed their forecasts last week to predict a July 8 rate cut, after new monthly inflation data for May showed the consumer price index rising by just 2.1 per cent over the year.
This was on the low side of the Reserve Bank’s two to three per cent target, giving the central bank leeway to move early to address Australia’s weak economic growth pace.
Australians are still reluctant to spend, with new retail trade data for May, released on Wednesday, showing a small 0.2 per cent increase, with café, restaurant and takeaway food trade flat for the month.