ANZ takes the plunge and sharply increases fixed mortgage rates

ANZ has decided to significantly increase its fixed mortgage rates.

These rate hikes come as wholesale swap rates have calmed down very recently awaiting signals from the US Fed on Thursday NZT.

But the increases are consistent with signals ANZ economists have sent to New Zealand and Australia. And they are compatible with longer-term wholesale rate increases.

ANZ mortgage rates were raised from +26bps to +35bps (see table below). The result is a level of rates well above not only their main rivals, but also the community of challenger banks.

ANZ already had some of the highest bids for popular fixed terms of one to three years. They are now alone, for a while at least.

They said in advising the hikes: “With high levels of volatility in global markets and heightened inflationary pressure domestically, there has been a significant increase in wholesale market rates.”

“For home loan customers who have not experienced rising interest rates, we understand this can add additional stress, particularly with rising inflation impacting other household spending. .”

ANZ said it was talking to its customers about extending the terms of their loans if they faced payment difficulties. It should be noted that these types of extensions can add significant additional interest charges to a loan during its life, in addition to the higher interest rates that will now apply. Use the calculator below, which will indicate the amount of these additional costs.

At the same time that rate hikes are being pushed on the mortgage side, ANZ is also increasing its term deposit rate offerings.

These progress between +5 and +35 bps. These will result in an increase in their six-month rate to 3.35% and their one-year rate to 4.10%. At these levels, they are similar to some of their rivals and lower than some challenger bank offerings. See here and here.

However, ANZ’s new nine-month rate at 3.65% is higher than most for this term.

Wholesale rates are pushing higher and higher in response to strong inflationary impulses and market expectations for moves by the US Federal Reserve. Another review by our Reserve Bank will take place in early October and markets are now pricing in wholesale positioning for just over a 50 basis point increase.

The Fed’s next review is Thursday, September 22, NZ time, and financial markets are coming to terms with another 75 basis point hike as a real possibility. This means that wholesale rates will come under upward pressure even as the United States faces growth challenges. The Fed has made it clear that it is ready to pay the price of economic growth to bring inflation under control. If they don’t, their market credibility will be shot.

And for New Zealand, that means we won’t be able to avoid these upward pressures.

The next time we get a Consumer Price Index reading will be October 18th. There are only about five weeks left. At best, inflation may have peaked in September as gasoline prices plateaued. But the labor market remains tight, the New Zealand dollar is depreciating and imported inflation shows no signs of abating. You’d be brave to assume September’s CPI will be significantly lower than June’s rate of 7.3%, so no relief in that department is on the horizon.

A helpful way to make sense of these home loan rate changes is to use our full function mortgage calculator which is also below. (Term deposit rates can be estimated using this calculator).

And if you already have a fixed-term mortgage that is not up for renewal right now, our break cost calculator can help you assess your options. But while breakout fees should be minimal in a rising market, they will start to bite in a falling market.

Here is the updated snapshot of the lowest advertised fixed term mortgage rates currently offered by major retail banks.

Also updated with changes made by HSBC.

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