Rate changes

In the past, Australian banks have announced interest rate changes following the Reserve Bank of Australia’s (RBA) announcement of its cash rate on the first Tuesday of each month.

Bank funding costs are less directly related to movements in the RBA’s cash rate. In addition to changes in the cash rate, the price we pay for customer deposits and for the domestic and international wholesale funding that we rely on to continue to lend to customers, have become increasingly important since the GFC.

This is why we review our variable home loan and small business interest rates on the second Friday of each month, with any changes to take effect on the following Friday. We also review variable rates for small businesses at the same time.

For customers, our approach provides certainty about when our rate reviews will occur.

For us, it provides flexibility to take all the relevant factors into account when reviewing our rates and allows a more balanced and informed discussion following the RBA’s decision each month.

Our next review is scheduled for Friday, 12 July 2013.

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We review our variable home loan interest rates on the second Friday of each month, with any changes to take effect on the following Friday. We also review variable rates for small businesses at the same time. ANZ's next rate review is scheduled for Friday, 12 July 2013.

The five key criteria we base our decisions on are:

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 we borrow from wholesale money markets.
3. Our competitive position: ANZ is determined to remain competitive by attracting customers, winning business and managing our costs.
4. The impact of economic conditions on our customers: We are committed to lending responsibly 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.

Communicating these criteria helps us better explain our future decisions on interest rates to customers.

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No. It means we will base our review on five key criteria – not just the RBA cash rate. 

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Like any business, we need to consider costs when setting our prices. As a bank, one of the ways we cover our costs is by adjusting the interest rates of our loans to reflect changes in our cost of funds.

Since the GFC, our cost of our funds (deposits from customers and money we borrow from wholesale markets to lend to customers) has become much more expensive.

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The monthly review applies to variable interest rate home loans and all variable interest rate loans and overdrafts for commercial customers (excluding Esanda).

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No. While many of the funding cost factors are the same, there are some differences.

Generally business loans have different security and risks than a home loan. As a result, we have to hold a higher level of capital and keep more in reserve for bad debts from business customers. This increases the cost of lending to businesses.

This may mean that variable rates for home loans and small business loans do not follow the same course.

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Home loans, particularly owner occupied home loans, are considered less risky than business loans. Generally business loans have different security and risks than a home loan. As a result, we have to hold a higher level of capital and keep more in reserve for bad debts from business customers. This increases the cost of lending to businesses.

In comparison, home loans, particularly owner occupied home loans, are considered less risky as we are lending to customers who are in employment, have a record of income and the loan is secured against the value of the home. This makes the loan much more secure and lowers the overall cost.

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We review our variable home loan interest rates on the second Friday of each month, with any changes to take effect on the following Friday. We also review variable rates for small businesses at the same time.

If there are any changes, we will tell you and you can make a choice about how you make your repayments. For example, if interest rates go down, you can choose to do nothing and keep paying the same amount and pay off your loan quicker. Or you can choose to reduce your payment.

We will continue providing you with competitive interest rates, innovative products and flexible options to give you confidence and control over your finances.

You will be notified of any change to interest rates in the usual way which depending on your type of loan, may include a letter in the mail, information on your account statement, on anz.com, in our branches or business centres, in discussion with your relationship manager or from our Contact Centre, as well as an advertisement in the Australian Financial Review.

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If rates change and the amount of your required repayment changes, we will give you written notice outlining:

• the new minimum repayment amount
• when it will take effect
• any action you are required to take.

Depending on loan type and the method by which you usually make repayments, your repayment may be automatically changed. You will be notified if this is the case.

If you wish to change your loan repayments yourself at any time, you can do so as follows:

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Variable interest rates are based on the cost of providing home loans to customers today, while fixed rates are based on the cost of funding a home loan for a period of time into the future. 

As a result, we make decisions on variable rates and fixed rates on a different basis and at a different time.

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We have no intention to disadvantage ANZ customers. ANZ is committed to providing you with competitive interest rates, innovative products and flexible options over the long term that give you confidence and control over your finances.

Importantly, we’re also committed to being a safe and secure bank and playing a key role in the financial health of our customers, the economy and the banking system in Australia.

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The Australian market is highly competitive, which can be seen in the difference between the standard variable interest rates of banks.

In addition to the major banks, there are over 100 other mortgage providers in the market, offering a total of more than 500 mortgage products. Businesses also have a large number of financial institutions to choose from.

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You can lodge a complaint in writing to:

Complaints Resolution Centre
Locked Bag 4050
South Melbourne VIC 3205

If this is inconvenient you can:

Call our Complaints Resolution Centre on 1800 805 154, 8am to 7pm (AEST), Monday to Friday.

Lodge a complaint online

Talk to our staff in any ANZ branch or Business Centre

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