Mortgage rates fall as ANZ responds to rivals
ANZ has lowered a range of fixed home loan rates in a move aimed at maintaining its dominant position in an increasingly competitive mortgage market.
The country’s largest mortgage lender announced rate reductions across several terms, including its lowest 18-month rate since April 2022.
Grant Knuckey, ANZ’s managing director for personal banking, said the changes would support both new borrowers and those coming up for refix, RNZ reported.
“The vast majority of ANZ NZ customers are on fixed rates, and they’re seeing the benefits of the falling interest rate environment,” Knuckey said. “For example, our one-year home loan special rate has fallen from 7.39% in March 2024 to 4.95% – that’s a drop of nearly 2.5%.”
18-month rate drops to 4.89%, matching rivals
ANZ’s 18-month fixed home loan rate has dropped 10 basis points to 4.89%, and its six-month special has fallen 20bps to 5.29%.
The bank’s move comes shortly after BNZ lowered its own fixed rates. BNZ was offering 4.95% for both one- and two-year terms, and 4.89% for 18 months – levels now matched by ANZ. The two-year rate has become particularly popular with borrowers, and ANZ has now aligned its 4.95% offer with earlier shifts from Westpac and BNZ.
Interest.co.nz noted that ANZ currently offers the most competitive carded six-month fixed rate among the major banks at 4.29%, although market demand is shifting away from shorter fixed terms.
Competitive pressure drives rate alignment
Although ANZ is the market leader – with more than 72% of its lending in home loans as of March, according to RBNZ data – its latest rate changes are seen more as a defensive move than a market-setting one.
“This is a matching shift by ANZ, not a market moving one,” said interest.co.nz. The publication noted that ANZ’s adjustments now bring its 12-, 18-, 24-, and 36-month fixed rates in line with BNZ’s.
Meanwhile, challenger banks are still leading the rate charts. For example, Bank of China and ICBC are offering the lowest carded rates for six months (5.15%), one year (4.85%), and 18 months (4.85%).
Margins tighten as housing dynamics shift
Rate reductions are occurring despite little movement in wholesale funding costs, suggesting that profit margins are narrowing under competitive pressure.
“What we are seeing is a slow but relentless tightening of margins in the mortgage market, on competitive pressures,” interest.co.nz said. “Readers of our swap rate chart will know that wholesale money costs are not falling.”
These changes also come amid structural shifts in the housing market. Many investors are beginning to offload properties ahead of the July 1 healthy homes compliance deadline, while buyers are becoming more price-sensitive.
“The housing market is hung over with excess inventories… some mum-and-dad investors [are] quitting their ‘investments’ as capital gains evaporate,” the report said. “Housing market sales activity may be rising, but it is because increasing numbers of owners are getting much more realistic about their price expectations.”
See the RNZ and interest.co.nz reports.
