Mortgages: ANZ cuts home loan rates ahead of Official Cash Rate decision

ANZ has cut its mortgage rates ahead of Wednesday's Official Cash Rate decision. Photo / NZME

ANZ is cutting most of its fixed home loan interest rates ahead of Wednesday’s Official Cash Rate (OCR) decision.

The largest of the cuts will be to its six-month terms, which drop 26 basis points (bps) for both the special (6.24%) and standard (6.84%) rates.

The bank’s standard one-year fixed-term rate will fall 20bps from 6.59% to 6.39%. Its special one-year rate also drops 20bps to 5.79%.

ANZ’s special and standard two- and three-year fixed rates will be cut 10bps.

The bank is also making changes to some of its term deposit rates, the largest of which is a 25bps cut to its 210-day terms (5%).

Its 150-, 180- and 240-day term deposit rates will drop 20bps to 4.80%, 5.05% and 4.95% respectively.

The Reserve Bank will release a full monetary policy statement at 2pm Wednesday, the last of 2024.

Economists and financial markets are united in their expectation the Reserve Bank will deliver a 50bps cut to the OCR.

If that eventuates, it would be back-to-back 50bps cuts after a similar move in October. The OCR has been falling since August when it was first cut from 5.5%.

ASB economists say the case for another sizeable cut remains almost as strong as it was in October. They describe it as the “least-regrets” path at present.

“With inflation back around the target mid-point and spare capacity starting to build up, the amount of monetary restraint needs to be quickly pared back. A 50bp cut would achieve that,” they say.

Much of the attention on tomorrow’s announcement is likely to be focused on the Reserve Bank’s new forecasts for the economy and where it is projecting the OCR to land next year.

At Capital Economics, senior economist Abhijit Surya argues that with inflation back at target, the labour market loosening rapidly and activity in the doldrums, “there continues to be a compelling case for the Bank to loosen policy aggressively”.