ANZ has raised the rate on its basic mortgage by up to 0.21 percentage points for new customers and increased the deposit size required to qualify for its lowest variable rate.
Customers looking to take out ANZ’s Simplicity Plus home loan will need a 40% deposit to qualify for the bank’s lowest rate, up from the previous 30% minimum, while those with a 10% deposit will have to pay 1.25 percentage points above this.
This means that to qualify for the sharpest ANZ rate, the bank’s required LVR will be 60% or less.
RateCity.com.au showed in the table below the ANZ Simplicity Plus home loan changes for owner-occupiers paying principal and interest.
|
Old LVR required
|
Old rate
|
New LVR required
|
New rate
|
Change
(% points)
|
Old LVR required
|
|---|---|---|---|---|---|
|
–
|
–
|
60% or less
|
5.44%
|
–
|
–
|
|
70% or less
|
5.34%
|
70% or less
|
5.49%
|
+0.15
|
70% or less
|
|
80% or less
|
5.44%
|
80% or less
|
5.59%
|
+0.15
|
80% or less
|
|
Over 80%
|
6.48%
|
90% or less
|
6.29%
|
-0.19
|
Over 80%
|
|
–
|
–
|
Over 90%
|
6.69%
|
+0.21
|
–
|
This latest move from CBA meant three of the big four banks, the other two being NAB and ANZ, have now increased select new customer variable rates in the past four weeks in addition to each bank’s standard Reserve Bank hike.
These banks have also launched new LVR tiers on select home loans to attract customers with big deposits.
RateCity.com.au’s database suggested that risk-based pricing, where borrowers with largest deposits are offered some of the lowest rates, is increasing in popularity among lenders. Two years ago, just 36% of lenders reserved their lowest variable rates for new borrowers with deposits of more than 20%. But now, 59% of lenders reserve their sharpest rates for these borrowers.
“In these volatile times, Australia’s biggest banks are trying to attract rock-solid customers in a bid to strengthen their loan books,” said Sally Tindall (pictured above), RateCity.com.au research director. “We’ve now seen three of the big four banks quietly put up select new customer variable rates in a small but significant pivot away from the discounting that’s dominated the refinancing market for the last 10 months.”
Tindall said that with the cost of funding skyrocketing as central banks around the world hike official rates to tame inflation, it has become increasingly difficult for banks to sustain the aggressive discounts seen in recent months to attract new business.
“While competition in the mortgage market might have passed its peak, relatively speaking it is still incredibly hot,” she said. “The big banks still want new customers; they just want ones with big buffers to fall back on.
“New customers who don’t have a decent amount of equity behind them are likely to be slugged with a risky tax, at least from Australia’s biggest banks. Borrowers who aren’t in a strong equity position don’t have to cop it, but they will have to shop around.”
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