ANZ Bank cut the rate on its standard variable mortgage by 37 basis points, joining other banks in holding back some of last week's rate reduction by the Reserve Bank.
The new mortgage rate for ANZ will be 7.05 per cent, effective from May 18. The bank said it had lowered the base rate on its online saver account by 50 basis points to 3.75 per cent, while the rate on its three-month term deposits were cut by 55 basis points to 4.75 per cent.
“At this month's review we noted that the RBA's recent decision to reduce the cash rate has impacted domestic funding sources giving us scope to reduce lending rates by 0.37 (percentage points)," said ANZ CEO Australia Philip Chronican.
“We continue to work hard to ensure we are competitive despite sustained funding pressure driven by the high rates we are paying to our 2.9 million deposit customers relative to the Reserve Bank's cash rate and the ongoing volatility in wholesale money markets,” he said.
ANZ is the last of the four major banks to announce its mortgage rate changes after the RBA cut 50 basis points from the cash rate on May 1.
The ANZ rate cut is roughly in line with the average mortgage rate for the top four banks - at 36.5 basis points. The Melbourne-based bank has stuck to its policy of revealing its rates on the second Friday of each month in a bid to distance its actions from those of the central bank.
CBA cut 40 basis points from its standard variable rate loan last week, taking it to 7.01 per cent, two basis points above National Australia Bank's 6.99 per cent rate, after that bank's 32 basis point cut. Westpac chopped 37 basis points, taking its mortgage rate to 7.09 per cent.
The major banks, while blaming higher funding costs for the need to withhold margins from customers, are also battling a slowdown in household borrowing.
The slowdown has proven a challenge for their business models in recent months. CBA laid off 100 mortgage servicing staff in Melbourne this week, citing faltering demand for home loans.
The RBA cut the official cash rate to 3.75 per cent this month, from 4.25 per cent, after weak inflation data indicated the economy's growth had struggled at the end of last year.
ANZ’s decision came just a month after it lifted its home and business lending rates by 0.06 percentage points, or 6 basis points.
The bank said its decision to lower its rates would save customers with a $280,000 home loan about $20 a week.
Small businesses with an average loan of $130,000 stand to save $9.25 a week.
ANZ’s shares were nine cents lower at $22.06 at 1527 AEST.
BusinessDay with AAP