ANZ becomes more aggressive with low equity loans

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ANZ, which is the last of the big banks to keep a two-tiered pricing structure for its home loans, has taken a half step to change this model.

Wednesday, April 23rd 2014, 10:53AM 3 Comments

It continues to have a higher interest rate for its low equity loans but has reduced the threshold this kicks in from an 80% LVR to 90%.

Its says, on its website, that this change applies to new fixed rates where the deposit or equity in the deal is 10%.

It does not apply to loans which are exempt from the Reserve Bank’s LVR restrictions including refinancing from another bank.

Home loans at 90% or higher LVR have an interest rate 50 basis points higher than standard rates amd all loans above 80% LVR also incur the cost of a low equity premium.

It does not display low equity rates on its website.

• Loans with a deposit of 20% or more will be charged the carded rate (or a rate the borrower negotiates).
• Loans with a 10% to 20% deposit will be charged from the carded rate card, plus the low equity premium.
• Loans with less than a 10% deposit will be charged the carded rate, plus 0.50%, plus the low equity premium.

That low equity premium is additional to the higher interest rate and applies to all loans above 80% LVR. It applies on a variable scale – see table.

ANZ says it charges low equity fees "to recover the extra costs it incurs when lending above 80% of a property's value

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