ANZ to pass on full 25-basis-point rate cut to borrowers

It has taken almost two days, but ANZ has jumped first, breaking the big bank silence and passed on the full 25-basis-point rate cut to its borrowers.

The bank says it will lower interest rates for variable-rate mortgages and small business lending by 0.25% per annum effective from December 16. 

This will reduce its new standard variable mortgage rate to 7.3% per annum.

In addition, the bank has introduced a special two-year fixed-term mortgage at 5.95% per annum on December 12. This is a reduction of 0.2% per annum on the current two-year rate and 1.35% per annum lower than ANZ’s new standard variable rate. 

The bank says future pricing decisions will be made on the second Friday of each month, (rather than following RBA rate decisions). 

ANZ chief executive Australia Philip Chronican says: “In the face of the economic and banking crisis in Europe, our decision on the size of the interest rate change has been one of the most difficult we have made in recent times. Retail banking margins have been contracting as the cost of funds has progressively risen over the last six months. 

“Bank funding costs are now largely unrelated to movements in the Reserve Bank’s Official Cash Rate. We have therefore taken a decision to announce future pricing changes for retail and small business variable interest rates on the second Friday of each month. 

“This provides a measure of predictability for customers on when rate changes will occur and it provides us with the flexibility to reflect movements in funding costs across the full spectrum of funding sources – not solely in response to the Reserve Bank’s cash rate. 

“We know many people in the community are doing it tough at the moment and, on this occasion, we felt that a decision to reduce interest rates by 0.25% per annum for home borrowers and for small business was the right one in the circumstances. 

“The significance of the crisis in Europe however has real consequences for the global economic outlook, for the Australian economy and for bank funding costs,” he says.

 

 

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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