ANZ reviews its variable home loan and small business interest rates on the second Friday of each month, with any changes taking effect on the following Friday. Find out more about our monthly rates review process and how ANZ sets its interest rates (PDF 468kB).
Our May 2013 rates decision
- Following our monthly interest rate review for May, ANZ has made a decision to lower variable rates for Australian retail home loans by 0.27%p.a. to 6.13%p.a. (6.23%p.a. comparison rate), effective Friday 17 May 2013.
- Rates for small business will decrease by 0.25%p.a.
- ANZ's next rate review is scheduled for Friday, 14 June 2013.
This reflects our current outlook across the key factors we consider each month, including:
- our cost of wholesale funding;
- the impact of economic conditions on our customers;
- our competitive positioning;
- ensuring attractive returns for depositors; and
- our regulatory requirement to operate safely and securely for our customers.
ANZ’s variable home loan rates continue to be competitively positioned in the market, providing our customers with great value.
ANZ's monthly interest rate review process
|Why has ANZ changed the way it sets interest rates?|
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, 14 June 2013.
|When and how is ANZ making decisions on interest rates?|
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 review is scheduled for Friday, 14 June 2013.
The five key criteria we base our decisions on are:
Communicating these criteria helps us better explain our future decisions on interest rates to customers.
|Does that mean ANZ's variable interest rates for home loans will keep going up, regardless of what the RBA does?|
No. It means we will base our review on five key criteria – not just the RBA cash rate.
|How does the cost of funds affect mortgage interest rates?|
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.
|What products/services are covered by your decision each month?|
The monthly review applies to variable interest rate home loans and all variable interest rate loans and overdrafts for commercial customers (excluding Esanda).
|Will interest rates for business loans always move in line with interest rates for home loans?|
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.
|Why are your business interest rates higher than home loan interest rates?|
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.
How does this affect customers?
|As an ANZ customer, how does this affect me?|
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.
|If rates change, will my repayments change automatically?|
If rates change and the amount of your required repayment changes, we will give you written notice outlining:
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:
|What can I do if I’m having difficulty making my repayments?|
Variable rates vs fixed rates
|Why do variable interest rates and fixed interest rates change at different times and by different amounts?|
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.
Competition in banking
|If the RBA drops rates and ANZ doesn’t follow, doesn’t that mean I’ll be worse off than customers at other banks?|
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.
|Doesn’t this demonstrate a lack of competition in the banking industry?|
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.
|I would like to make a formal complaint. How can I do this?|
You can lodge a complaint in writing to:
Complaints Resolution Centre
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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