Major banks offering cheaper standard variable than fixed rates for the first time since 2019


BREAKING NEWS: Interest rate shock as figures show variable rates are now cheaper than fixed plans for the first time in years

  • ANZ has cut variable mortgage rate by 0.43 percentage points to 2.29 per cent
  • Big four banks now offering average standard variable rates below fixed rates 
  • RateCity research director this was occurring for the first time since June 2019 


Australia’s big banks are offering cheaper variable mortgage rates than fixed rates for the first time in more than two years.

The Commonwealth Bank and Westpac last week raised their fixed rates for the second time in weeks.

But in a sign of things to come, ANZ has cut it standard variable rate for borrowers with a bigger mortgage deposit.

ANZ on Monday cut its Simplicity Plus home loan rate by 0.43 percentage points to 2.29 per cent, making it cheaper than the bank’s three-year fixed rate of 2.39 per cent. 

Australia’s big banks are offering cheaper standard variable mortgage rates than fixed rates for the first time in more than two years. But in a sign of things to come, ANZ has cut it standard variable rate for borrowers with a bigger mortgage deposit

The low rate will be available for borrowers with a 30 per cent mortgage deposit. 

How the rates compare

ANZ variable rate with 30 per cent deposit: 2.29 per cent

ANZ three-year fixed: 2.39 per cent

ANZ variable rate with 20 per cent deposit: 2.49 per cent

ANZ four-year fixed: 2.69 per cent

For the first time since June 2019, the lowest standard variable rate of the big four banks is lower than their average, three-year fixed rate for owner-occupiers paying off principal and interest, a RateCity analysis showed. 

Reserve Bank of Australia Governor Philip Lowe last week hinted the cash rate could be raised from a record-low of 0.1 per cent in 2023 instead of 2024.

RateCity research director Sally Tindall said borrowers with standard variable instead of fixed-rate mortgages would get burnt when the Reserve Bank eventually put up interest rates for the first time since November 2010.

‘The problem with variable rates is what goes down can also go up,’ she said.

‘While the RBA has insisted the cash rate will not rise next year, the banks can still hike these rock-bottom variable rates at any time.’

ANZ cut its standard variable lending rate for borrowers with a 20 per cent deposit by a smaller 0.23 percentage points to 2.49 per cent.

Canstar group executive of financial services Steve Mickenbecker said fixed rates were likely to keep rising as the banks offered better standard variable deals for borrowers with a bigger mortgage deposit.

‘The big banks are still offering short term fixed rates below their variable rates, but borrowers can expect to see them continue to rise,’ he said.

‘The fixed rate bargains are not going to get any sharper than they are now.’

ANZ, NAB and Westpac are offering one-year fixed rates of 1.99 per cent.

But the rates are much higher for three-year fixed rates with the Commonwealth Bank charging 2.69 per cent compared with 2.29 per cent for Westpac and 2.28 per cent for National Australia Bank.

Borrowers pay more for a four-year fixed rate with CBA charging 2.89 per cent compared with 2.69 per cent for Westpac and  ANZ and 2.59 per cent for NAB.

While Australians are piling on the mortgage debt, they are cutting back on their credit card spending following long lockdowns in Sydney and Melbourne.

New Reserve Bank of Australia data showed consumers owing $17.7billion in September, marking a $9.3billion drop since the pandemic began in March 2020.

This was the lowest credit card debt since November 2003.

RateCity research director Sally Tindall said borrowers with standard variable instead of fixed-rate mortgages would get burnt when the Reserve Bank eventually put up interest rates for the first time since November 2010

RateCity research director Sally Tindall said borrowers with standard variable instead of fixed-rate mortgages would get burnt when the Reserve Bank eventually put up interest rates for the first time since November 2010

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