ANZ has increased its three-year fixed rate mortgage by 0.20% to 5.34%, making it the first major bank to buck the record-low interest rate trend and sparking fears that the rate cut gravy train could be charging to a halt.
“The decision was based on a number of factors, including the recent funding cost pressures specific to our fixed rate products, which includes increased pricing in bond markets following recent volatility,” an ANZ spokesperson tells Australian Broker.
Yesterday, we reported on Westpac CEO, Gail Kelly’s comments that rate cuts by major lenders outside of the RBA cycle are unlikely in the near future. Like ANZ, Kelly cited increasing funding costs, as well as ‘very low’ credit demand, as her reasoning behind the statement.
“Funding costs had been on a lovely decline earlier in the year and you could see that actually coming through; the funding costs were lower than they’d been a year ago and two years ago and three years ago. Right at the moment, they’ve picked up again. In fact, people are not out there raising money through off-shore wholesale funding opportunities.”