ANZ has become the second major banking group to increase interest rates on housing and business loans by substantially more than the rise in official interest rates.
ANZ has become the second major banking group to increase interest rates on housing and business loans by substantially more than the rise in official interest rates.
ANZ announced its standard variable home loan rate will increase to 7.8 per cent and that the bank has scrapped its exit fee for mortgages.
Last week the Commonwealth Bank announced its rates would be increasing by 45 basis points.
ANZ said the increase to its standard variable rate on home loans was due to the "sustained" rise in the cost of its funds in recent months.
The bank said it has also lifted interest rates on deposits by up to 75 basis points in recent weeks.
ANZ said the changes would become effective from Monday, except interest rate changes on credit card, which would become effective on Tuesday.
Interest rates on credit cards will rise by 25 basis points and rates on business loans will increase by 39 basis points, the bank said in a statement.
Today's decision means there is considerable variation within the market on interest rates.
* ANZ - 7.8 per cent
*Commonwealth - 7.81 per cent.
* National Australia Bank - 7.24 per cent
* Westpac - 7.51 per cent.
* Bankwest - 7.3 per cent.
ANZ said it would scrap its deferred establishment fee, or exit fee, on mortgages and would waive loan approval fees for all new and existing mortgage customers applying for the three-year fixed rate mortgage by December 31.
Over the past week, ANZ raised the interest rate on one and two-year fixed home loans by four basis points to 7.03 per cent and 7.46 per cent respectively and lowered its three-year fixed loan rate by two basis points to 7.54 per cent, according to data from financial comparison website RateCity.
The bank's interest rate for its four-year fixed home loan was increased by nine basis points to 7.78 per cent, and its the rate for its five-year fixed mortgage is eight basis points higher at 7.88 per cent.
On Wednesday, ANZ said it would drop the interest rate on its three-year fixed rate mortgage to 7.1 per cent.
The bank will also give borrowers of other institutions $1,000 to offset costs if they switch to ANZ and take up a three-year fixed rate loan.
Meanwhile Police and Nurses has announced that its variable rates on home loans would only be increased in line with the Reserve Bank rise of 0.25 per cent from 7.09 per cent.
"We have decided not to go above the Reserve Banks rise, though we have also experienced increases in the cost of funding mortgages," said CEO Fred Huis.
"We thought long and hard about whether an increase was necessary and we came to the conclusion that it was not in the best interests of our members."
