ANZ takes -10 bps off some key home loan and term deposit rates. In fact, ANZ has all but one of its TD rate in this rate cycle below 6%. It is a clear signal that retail interest rates are passing their peak

Update: This article has been updated. ANZ still has a 6% nine month term deposit rate.

ANZ has trimmed 10 basis points (bps) from its six-month and one-year fixed home loan rates.

Although the changes themselves are not much, the fact they were made by our biggest bank makes them notable.

The changes don't make ANZ especially competitive, although the new one year 7.14% rate is the lowest of the main banks for that term.

But it is still 25 bps higher that the market-leading rate from Heartland Bank.

The one year fixed term is the contract chosen by most homeowners with a mortgage.

And almost all other banks will very likely match that rate, if asked. Some might even go lower. But it will likely depend on the strength of the borrower's financial position.

For ANZ to have taken this step as the winter selling season starts could well be in response to existing discounts their rivals are already granting. ANZ is the largest home loan banker and they are a perennial target of their rivals.

Or it may be because May is the last change this financial year banks have to bolster their mortgage volumes.

With a new carded offer at 7.14%, we should note that the wholesale swap rate is now 5.45%. That means the spread is now just 169 bps. That is skinny on an historical perspective. Margins this low will be focusing attention at ANZ HQ, and it will be less when below-the-card discounts are applied, and mortgage broker commissions are paid. (They alone are about 80 bps.)

So it will no surprise that ANZ has also trimmed -10 bps from its 6, 9, and 12 month term deposits. Customer deposits (including TDs) are the main source of bank funding, and mortgages are the main source of bank business. So that -10 bps cut will also be important to them.

Term deposit customers are far less likely to be motivated to ask for a better rate, even though they should. But that demographic seems to have been more timid than borrowers and have tended to be price-takers. Their savings and investment habits 'replicate' in standard patterns and banks know that.

The -10 bps trim of term deposit rates takes all ANZ's TD offers lower than 6% now, except for the nine month term.

In fact, ANZ is the first bank in this interest rate cycle to not offer a 6% or higher rate for any term now.

One useful way to make sense of the changed home loan rates is to use our full-function mortgage calculator which is below. Term deposit rates can be assessed using this calculator.

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options. But break fees should be minimal in a rising market. They will become important in a falling market however.

Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.

Fixed, below 80% LVR	6 mths	1 yr	18 mth	2 yrs	3 yrs	4 yrs	5 yrs
as at May 3, 2024	%	%	%	%	%	%	%
ANZ	7.25 -0.10	7.14 -0.10	6.89	6.79	6.65	7.34	7.34
	7.29	7.24	6.89	6.75	6.65	6.55	6.39
	7.29	7.24	6.89	6.79	6.65	6.55	6.55
	7.35	7.25		6.79	6.65	6.55	6.55
	7.39	7.29	6.95	6.75	6.65	6.59	6.39
Bank of China		7.09	6.75	6.65	6.49	6.39	6.39
China Construction Bank	7.19	7.09	6.89	6.75	6.49	6.40	6.40
Co-operative Bank	7.29	7.24	6.99	6.79	6.65	6.55	6.55
Heartland Bank		6.89	6.69	6.55	6.35
ICBC	7.19	7.05	6.95	6.85	6.59	6.49	6.49
	7.35	7.24	6.99	6.69	5.99	6.19	6.19
	7.39	6.99 -0.25	7.19	6.75	6.65	6.59	6.59