ANZ is cutting interest rates for Australians with a mortgage

ANZ has become the latest of the Big Four banks to cut fixed mortgage rates, providing borrowers with generous relief expected next year.

The banking giant on Friday cut its three-year fixed rates by 60 basis points to 5.99 percent, while two-year fixed rates were cut by 55 basis points to the same level.

Following ANZ's latest move, all of Australia's Big Four banks are now offering three-year fixed mortgage rates, starting at “five” for borrowers with a 20 per cent deposit.

This comes as financial markets anticipate four Reserve Bank interest rate cuts in 2025.

RateCity website editor Laine Gordon said ANZ had bowed to the competition, which meant other lenders were also likely to cut their fixed interest rates.

“ANZ is the last of the big four banks to cut its fixed home loan interest rate below 6 per cent, but the bank has succumbed to competition,” she said.

“The number of lenders joining the under six club is growing rapidly.”

According to RateCity data, over 70 lenders currently offer a fixed interest rate starting with “five”.

However, the lowest fixed rates offered by the Big Four banks are still higher than Abal Banking's market-leading variable rate of 5.75%.

This means that lower variable rate customers would benefit if RBA rates were cut by 100 basis points as expected.

The Big Four banks still only offer variable rates, starting from the 'six', with ANZ currently offering the lowest rate at 6.14%.

This is just below Commonwealth Bank's 6.15% level and well below NAB's 6.79% and Westpac's 6.44%.

Smaller players still offer lower fixed rates than the Big Four banks.

SWS Bank has the lowest fixed interest rate at 4.99 per cent, meaning a borrower currently on a variable rate starting in the 'six' will not lose out if the RBA cuts rates four times next year.

Following ANZ's latest move, all of Australia's Big Four banks now offer three-year fixed mortgage rates below 6 per cent

Macquarie Bank offers a fixed interest rate of 5.39% for two, four and five years.

The 30-day interbank futures market currently expects the Reserve Bank to move interest rates from a 12-year high of 4.35% in March.

It expects four cuts in 2025, which will bring the interest rate back to 3.35% for the first time since March 2023.

New Zealand has already cut interest rates twice this year, and central banks in the US, UK, Canada and the European Union will also ease monetary policy in 2024.

However, Westpac chief economist Luci Ellis, a former deputy governor of the Reserve Bank of Australia, said central bank interest rates in the 2020s were likely to be higher than in the 2010s.

“Real interest rates have been trending down for decades, but a very long-term view supports our view that rates in the future will be higher on average than before the pandemic,” she said.

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