ANZ will increase its floating home and commercial loans. Photo / Steven McNicholl
ANZ will raise interest rates on its floating and flexible home and business loans as the first major bank to act following yesterday’s rise in the official exchange rate.
The Reserve Bank raised the OCR from 0.75% to 1% and forecasts more hikes to come as it tackles the highest rate of inflation in more than 30 years.
ANZ, the country’s largest bank, said it would pass on the full cash rate hike, raising its floating mortgage rate to 5.04% and its flexible rate to 5.15%.
Most home loan customers have fixed term rates, but about 10% of bank borrowers are sitting at floating rates.
Ben Kelleher, ANZ’s chief executive for personal banking, said while interest rates remained historically low, inflation meant they were likely to continue to rise for some time.
“The historically low rates we have had are, in part, due to local and international responses to Covid-19 over the past two years.
“As the Reserve Bank works to bring inflation under control and restore some balance to the economy, it has signaled that the OCR will continue to rise, potentially up to around 3.4% by the end of 2024. If that happens, interest rates for loans and savings are likely to continue to rise as well.”
Kelleher said while the rate hike would look daunting to borrowers who hadn’t seen it before, they were still at relatively low levels and banks’ affordability ratings factored in that they could change during the term of a loan.
“The area people will need to watch in the coming months is the impact of rising inflation on their other expenses.”
He urged any customers who had concerns or wanted to take the opportunity to discuss their finances to contact the bank.
Commercial borrowers will also see their floating and overdraft interest rates with the bank increase by 0.25 percentage points.
Lorraine Mapu, ANZ’s chief business officer, said inflationary pressure continued to impact the wider business community, including input costs, supply chain issues and a labor market. wrought up.
“While it has been impressive to see how quickly our business community has adapted to working with Covid-19, some continue to be impacted by the ongoing disruption caused by the pandemic. We encourage them to speak to us about some of the most targeted measures with which we can support them.”
The increases will apply to new loans from March 1 and to existing loans from March 15.
The bank will also raise its interest rate on its serious savings account by 0.25 percentage points to 0.7% on March 1 and said interest rates on a number of other products from savings would increase.