- Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024
Well they threaten it and now it has come true.
ANZ today announced it will increase interest rates for variable rate mortgages and small business lending by 0.06%pa.
This is the first time the bank has moved to increase its rates independently of the RBA’s cash rate since it announced its split with the central bank’s pricing in December last year.
According to a statement from the bank, the decision follows ANZ’s monthly interest rate review which considered:
- the intense pressure on retail and business margins in recent months being sustained following:
- increased competition among banks for consumer and business deposits that has provided higher relative returns to ANZ’s 2.9 million deposit customers;
- higher costs paid by ANZ for $8 billion in long-term wholesale funding raised since October 2011 as a result of the economic and financial crisis in Europe which has made money more expensive for all banks to borrow.
- the stable monetary policy setting announced this week by the Reserve Bank of Australia following successive reductions in the cash rate in late 2011.
- the competitive environment, the impact of higher rates on customers and on loan growth, and also the need to act in a considered way with growing pockets of weakness in the Australian economy.
Effective 17 February 2012, ANZ’s new standard variable mortgage rate will be 7.36%pa (7.46%pa comparison rate). New small business rates are effective from 17 February.
ANZ will also cut its three year fixed rate mortgage by 0.15% to 5.99%pa as part of its Breakfree banking package.
ANZ CEO Australia Philip Chronican said: “this month we faced a serious dilemma in our review, balancing the rising cost of bank funding including deposit customers’ interests in receiving highly competitive rates, and the expectation of borrowers that we keep lending rates as low as possible.
“In December and January we absorbed the additional funding costs in the hope that funding pressures would ease and that no change in lending rates would be necessary.
"However, margins in retail and business banking have now been squeezed for a number of months and we’ve taken the difficult decision to pass on part of the higher costs to customers while we also get on with taking action to reshape the bank for tougher times.
“Our new monthly interest rate review process recognises that the Reserve Bank’s cash rate alone is not an accurate reflection of bank funding costs, particularly since the global financial crisis which has left all banks with the task of raising funds in volatile global markets and through stronger competition for deposits.
“This change comes with a duty to explain to our customers what drives our decisions and provide greater transparency about our funding costs.
“We also want to assure customers that we are committed to providing competitive products and we hope there will be an opportunity to lower rates in the coming months as greater confidence returns to global funding markets.
“There has been much debate on banks in recent days. While we recognise our decision may leave some people frustrated and even angry, we believe Australia needs safe, well-run commercial banks that aren’t a burden on taxpayers and that can continue to lend. The alternative of weak, constrained banks that we see in the United States and in Europe is a recipe for stagnation and recession in Australia," Mr Chronican said.
Richard Taylor | Australia's leading private lender
Love this bit – I don't seem to recall the banks saying 'no thanks' to the government guarantee 4/5 years ago.Qlds007 wrote:Australia needs safe, well-run commercial banks that aren’t a burden on taxpayers and that can continue to lend.PaullieMember@paullieJoin Date: 2009Post Count: 217
Westpak just followed suit increasing by 0.1%.
haha.Jamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
Seems the ANZ decision to break away from the RBA's first Tuesday of the month announcements has given the other banks more time to keep rates at existing levels for longer.
Competition would be a good thing. Oh for other big players in the market.
And, as if we needed a study to tell us what we all knew about rate fluctuations read this.PaullieMember@paullieJoin Date: 2009Post Count: 217
<moderator: delete language> Billions in repeatedly increasing profits every year yet they do not follow the rba cash rate move.Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539
Arrogant thick-skinned bastards. That does it for me. They're losing my support. I'll be walking.Jamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
Before you jump ship – the original post from Richard about ANZ increasing rates was in Feb. This isn't something that's happened recently.
JamiePLCParticipant@plcJoin Date: 2012Post Count: 400JT7Member@jt7Join Date: 2010Post Count: 286
Perhaps an ideal time to be considering locking in at an attractive mid term rate 2-3 years.
ING passing on the full 0.25 basis points effective from 12th Oct.
Be interesting to see what the others do.Scott No MatesParticipant@scott-no-matesJoin Date: 2005Post Count: 3,856
Why should banks move at the same time, direction and magnitude as the Reserve Bank? State Govts borrow from the RB not the commercial banks, they have to pay for their funds (from shares, deposits and borrrowings).
My heart bleeds for the banks who are always under the hammer (just waiting for my ANZ share to level out a bit).Jamie M wrote:Before you jump ship – the original post from Richard about ANZ increasing rates was in Feb. This isn't something that's happened recently.
After I couldn't find confirmation anywhere that the banks had raised rates I wondered what was going on. As Tom said, I thought ANZ and Westpac were out of their minds in their own little profit focused bubble world, but a rate raise didn't seem totally out of character. After further consideration, even the executives of those two banks should surely realize that not passing on the majority of the rate drop would be very damaging to sentiment and the economy and would lose them a lot of customers (including me) as well as cause them to be the deserving focus of unprecedented abuse.jmsrachelParticipant@jmsrachelJoin Date: 2012Post Count: 711
Haha i too got caught out, freaked me out for a minute