ANZ bank has become the first of Australia’s big four banks to announce it will pass on the full 0.25 percentage point Reserve Bank of Australia (RBA) hike to its variable mortgage rate. The move will see ANZ’s lowest variable rate rise to 5.09%, effective from 17 February. However, the bank’s savings rates will remain largely unchanged, with only the ANZ Plus Save account seeing an increase to 4% from 14 February.

ANS announcement

ANZ bank has announced that it will pass on the full 0.25 percentage point RBA rate hike to its variable mortgage customers, becoming the first of Australia’s big four banks to do so. Effective from 17 February, ANZ’s lowest variable rate will rise to 5.09%, affecting both new and existing customers. The move will also increase repayments for owner-occupiers, with those on a $500,000 debt seeing an increase of $73 per month.

However, ANZ’s savings rates will remain largely unchanged. The only exception is the ANZ Plus Save account, which will see an increase from 3.75% to 4% from 14 February. The bank’s popular Progress Saver and Online Saver accounts will not see any changes to their rates.

What it means

ANZ’s decision to pass on the full rate hike to its mortgage customers is likely to put pressure on the other big four banks – Commonwealth Bank, National Australia Bank, and Westpac – to do the same. It remains to be seen whether the other banks will follow ANZ’s lead or absorb some of the rate hike themselves.

ANZ’s move comes after the RBA announced its decision to increase the cash rate to 0.25% in early February, citing concerns over rising inflation and a tightening labour market. The RBA expects inflation to exceed its target range in the near term, before moderating in the medium term.

Conclusion

ANZ bank’s decision to pass on the full RBA rate hike to its mortgage customers is likely to put pressure on other banks to do the same. While ANZ’s savings rates remain largely unchanged, the increase to the ANZ Plus Save account may provide some relief to savers. The RBA’s decision to increase the cash rate reflects concerns over rising inflation and a tightening labour market, and it remains to be seen how this will impact the wider economy in the coming months.