ANZ keeps rates unchanged in first independent call

ANZ has kept its variable mortgage lending rates unchanged following its first interest rate review out of step with the RBA. 

The bank’s standard variable rate is currently 7.3%.


The monthly review follows a statement in December 2011 that the bank would announce any changes to variable mortgage rates for retail mortgages and small business lending on the second Friday of each month, not following official RBA cash rate announcements. 

The next RBA announcement will be made on February 7, when it is expected to cut the cash rate by 25 basis points to 4%

ANZ will make its next independent rate decision on February 10. 

“By reviewing key variable lending rates each month we can more accurately reflect the sustained changes in funding costs we incur through the interest we pay to customers for their deposits and to investors in wholesale money markets,” says ANZ chief executive Australia Philip Chronican. 

“It helps us to contribute to an informed debate about how we fund our customers’ loans and the effects of the continuing global financial crisis on Australia, particularly the significant economic instability which currently exists in Europe. 

“We want the process of setting interest rates for our customers to be simple and transparent. This includes a promise to work hard to maintain competitive interest rates that will not disadvantage customers over the term of their loan. 

“To increase certainty for our customers the effective date for any variable interest rate changes made as part of the monthly review process will now be one week after the announcement, regardless of whether interest rates are going up or down. 

“In coming to our decision this month we wanted to be clear that these higher interest rates we are now paying our depositors and the elevated prices we are required to pay for wholesale funds are going to be sustained given the volatility we saw late last year. 

“We also assessed our competitive position, the subdued state of credit demand and the overall state of the economy and decided it was prudent to maintain our current rates at this time,” he says. 

The bank used the following criteria in making its decision: 

1. "Ensuring attractive returns for depositors: ANZ is committed to providing customers with competitive returns and absolute security for their savings. 

2. "The cost of wholesale funding: This covers the interest we pay on funds from wholesale markets. The cost of these funds has become more volatile and expensive since the GFC and has been elevated in recent months as a result of the European debt crisis. 

3. "Our competitive position: ANZ is determined to remain competitive by attracting customers, winning business and managing our costs. 

4. "Our customers’ ability to afford loan repayments: We are committed to pricing loans and lending in a responsible way and giving consideration to the financial health of our customers, the economy and the banking system in Australia. 

5. "Regulatory requirements: As a bank, ANZ works within a strong prudential and regulatory environment. For example, we must hold capital reserves and levels of liquidity to operate safely and securely for customers.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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