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ANZ National prepares rate hike

ANZ National Bank is raising the interest rate it charges on its FlexiPlus revolving credit accounts despite most economists expecting the Reserve Bank will hold off raising its official cash rate (OCR) until well into next year.

Thursday, October 20th 2011, 5:00AM 7 Comments

by Jenny Ruth

The bank will raise the interest rate from 5.65% to 5.86% from November 1 on both ANZ and National Bank-branded FlexiPlus accounts which are secured by mortgages. However, its standard floating rate remains unchanged at 5.74%.

A letter advising FlexiPlus customers of the rate rise gave no reason for the increase.

"These types of home loan offer significant flexibility for customers in comparison to our other home loan products, as they act as a revolving credit facility and fully transactional account secured by a mortgage," an ANZ spokesperson says.

"Interest rates for these products are influenced by a number of factors including competitive positioning, the cost of funding, and the cost of the additional customer functionality with the Flexi product. We regularly review our interest rates taking all of these factors into account."

Which doesn't really answer the question.

David Tripe, head of banking studies at Massey University, says it "makes no sense at all" that the interest charged on such revolving credit accounts to be lower than a bank's standard rates.

"I have long argued that those products are far too cheap," Tripe says.

When such accounts were first introduced about 1990 they used to be priced at about a 100 basis point premium to banks' floating rates, he says.

"Pricing went completely haywire on that class of product seven or eight years ago." Tripe suggests this was the result of marketers within banks taking over "rather than anybody with any rational approach to credit risk and pricing."

Even after the rise, "an 11 basis point premium is hardly a big deal."

« NZF home loan deal nearly settledDeteriorating growth outlook likely to keep rates on hold »

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Comments from our readers

On 20 October 2011 at 8:52 am Amused said:
"I have long argued that those products are far too cheap," Tripe says.

Clearly Mr Tripe is in the dark as to the margins banks are currently making on floating interest rates. As head of banking studies at Massey University one would have thought he would be better informed on the subject matter he teaches.

ANZ National's increase to their advertised FlexiPlus (revolving credit) accounts is unjustified and out of synch with what their competitors are able to offer borrowers. I negotiated a rate of 5.39% p.a. for a client at Westpac yesterday who wanted some of their mortgage on revolving credit. I didn't even have to push that hard.
On 20 October 2011 at 3:52 pm Garry Mason said:
As a customer with a FlexiPlus loan I am nonplussed at the increase. When we are strongly encouraged to use this type of loan by the bank and then to increase the rates while other banks are reducing rates leaves a sour taste. The sooner we look at better consumer protection against bad bank practice the better.
On 20 October 2011 at 5:59 pm Dallas Hannam said:
Hi person who comments on the 5.39% Westpac rate. Can you please give me more information as I was recently told by Westpac they would only lower mine to 5.59. Are you able to give the Westpac employees name and branch as I think I will change my loan manager. This information would help me negotiate
On 21 October 2011 at 12:53 pm Tracey said:
Go to a Mortgage Broker - they will negotiate a rate on your behalf
On 21 October 2011 at 3:39 pm Amused said:
Hi Dallas, as Tracey mentions you'll need to engage the services of a mortgage broker such as myself to negotiate the interest rate with the bank on your behalf. Suggest you search online for the closest broker to where you live.
On 22 October 2011 at 2:16 pm denis said:
Ridiculously, a few years ago I had two Westpac Blokes competing for my home loan. When I went with the better rate offered by Westpac Bloke 2, the other one phoned me back to have a go at me!
On 4 November 2011 at 8:35 pm Dallas Hannam said:
Hi whoever managed to negotiate the 5.39 % with Westpac trust I wouod be very keen to hear from to negotiate for me. please make contact I will get you to negotiate for me.
Commenting is closed



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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 ▼3.85 ▼3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac ▼3.39 3.45 ▼2.99 ▼3.35
SBS Bank 4.54 ▼3.05 3.19 ▼3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - ▼2.55 2.69 ▼2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 ▼2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 ▼3.29
TSB Bank 5.34 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 3.65 3.69 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.10 3.19 3.12

Last updated: 7 August 2020 5:51pm

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