Two big banks cut longer term mortgage rates

ANZ has dropped some of its mortgage rates. Photo / Steven McNicholl

Two major banks cut some of their longer term home loan rates overnight but shorter term rates aren’t shifting yet.

ANZ has sliced between 15 and 55 basis points off its rates from 18 months to five years, but its six-month and one-year rates will see no change.

The bank’s standard two-year rate has dropped 29 basis points to 7.05 per cent while its three-year rate fell 25 basis points to 7.19 per cent.

ANZ’s special rates, which require a minimum 20 per cent equity or deposit, are down 29 basis points to 6.45 per cent for a two-year fixed home loan and 25 basis points to 6.59 per cent for its three year rate.

Simultaneously the bank lifted some of its shorter-term deposit rates between 5 and 55 basis points while cutting between 5 and 25 basis points off its longer-term deposit rates.

Its 180-day term deposit rate is now 4.7 per cent and its two-year deposit rate is 5.2 per cent.

Meanwhile, BNZ made changes to its six-month, one-year and two-year mortgage rates. It has lifted its six-month and one-year “classic” home loan rates from 6.49 per cent to 6.54 per cent and cut its two-year rate from 6.59 per cent to 6.49 per cent.

Its standard and Flybuys rates will increase from 7.09 to 7.14 per cent for six-month and one-year rates, and decrease from 7.19 per cent to 7.09 per cent for its two-year home loan rate.

The cuts came after signs the employment market could be softening, which could result in a smaller increase in the official cash rate at the next Reserve Bank monetary policy announcement.

Yesterday, new data showed the unemployment rate hit 3.4 per cent for the December quarter - slightly above the 3.3 per cent from the prior period.

It was a slight change but enough to have economists locking in a 50-basis-point (bp) hike for the Official Cash Rate (OCR) this month - rather than the 75 basis points the Reserve Bank had initially been projecting.

Mortgage rates have risen sharply in the last 18 months after the fastest rise in the OCR in history.

The rate was cut to a record low 25 basis points during Covid to help support the economy and give relief to borrowers but had risen to 4.25 per cent by the end of last year as the central bank tried to stop raging inflation.

It is forecast to peak at 5.5 per cent by midway through this year although some economists expect it won’t need to get that high now, and could even begin to be cut by the end of 2023 if the country goes into a recession.

The next OCR announcement is due on Wednesday February 22.