After being dubbed to have the most competitive interest rates among the five major banks for five years, ANZ raised its interest rates for all its long-term home loans.
This rate adjustment brought the bank’s new interest rate to 2.68%, .45% higher than the previous rate at 2.24%. The move came amid the five-year war on lower interest rates among major banks.
The bank, however, ended their two-year rate under 2 per cent for the first time.
With this, ANZ’s new interest rate lost its title as the most competitive title for half a decade.
Despite this, most mainstream lenders are keen to maintain their relatively low interest rates for short-term home loans.
Meanwhile, the bank’s four-year rate has now been fixed at 2.49 per cent, 25 per cent higher than the prevailing rates among the top four banks. However, the same bank lowered the interest rate for its two-year rate and is now at 1.94 per cent.
With the cash rate likely to play around 2-3 per cent in the next three years, interest rates for short term home loans are not likely to go beyond RBA’s ideal range.
This news is somewhat unfortunate as the lowering of the interest rates was announced in the middle of the pandemic and was retracted while the entire country is still struggling to recover from the aftermath of this global crisis that impacted all facets of society.
In fact, a report from Fitch Rating noted that the rate of mortgage repayment arrears is expected to balloon in 2021. This is a totally different story from what was observed in the last quarter of 2020 where the rate of mortgage repayment arrears was miniscule, almost unnoticeable thanks to repayment deferral from lenders.
As things are starting to revert to normal, lenders are reinstating its individual policies on collecting payment. This despite the fact that many Australians are still struggling to make ends meet, let alone make mortgage repayments, as a direct impact of the global pandemic.
Thankfully, both employment and underemployment rates are starting to improve after hitting a downhill amid the pandemic. But despite all of this, the Australian government has instituted ways on how homeowners who are struggling to make repayments can cope with their financial obligations this pandemic.
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