ANZ drops home loan fixed interest rate

12.20pm

ANZ has joined the home loan rate war, dropping its two year fixed interest rate by 35 basis points.

The bank announced today its two year rate would fall from 7.20 per cent per annum to 6.95 per cent per annum for new applications received from tomorrow.

ANZ's six month, one-year, 18-month, four-year and five-year fixed rates are unchanged at 7.75 per cent, while the three-year fixed rate will remains at 7.60 per cent.

The bank said all customers who have a new home or residential investment loan of at least $50,000 approved and drawn down between September 26 and December 24 will receive a $500 contribution to legal fees and no loan approval fee.

ANZ's move follows recent drops by ASB Bank and BNZ.

Last week ASB dropped its two year rate from 7.75 per cent to 6.95 per cent, prompting the Bank of New Zealand to live up to its 'Unbeatable' advertising campaign and hit back with a new two year rate of 6.9 per cent.

The banks' new rates are only slightly higher than the official cash rate, which is currently sitting at 6.50 per cent, following six rate hikes by the Reserve Bank so far this year.

Reserve Bank Governor Alan Bollard signalled the latest hike, on October 28, looked likely to be the last for the year. Despite his comments the market has not ruled out further rises this year. BNZ currency strategist Sue Trinh said in a commentary today the probability of rates going up again in December was 50/50.

- NZPA