ANZ cuts variable home loan rate

ANZ Banking Group Ltd has moved to lower its variable home loan interest rate by 25
basis points, saying the cost of wholesale funding was easing.
Effective from Monday, October 27, the interest rate on ANZ's standard variable rate
home loan will fall by 0.25 percentage points to 8.32 per cent.
Other variable rate home loans will also decrease by 0.25 percentage points.
ANZ said the cut was the first step in delivering on its promise in January to pass
on interest rate cuts as global market conditions ease.
The bank said the decision to cut the rate followed measures taken by governments in
Australia and elsewhere to restore confidence to the global investment community.
An expectation of a further easing in monetary policy was also anticipated to flow
on to lower wholesale funding costs.
ANZ's Australian operations chief, Brian Hartzer, said wholesale funding costs may
be easing but they were still abnormally high.
"Passing on further interest rate cuts to mortgage customers may take some time as
it's clear the damage caused to the global financial system from the US sub-prime
crisis is significant and there may also be further volatility along the way," Mr
Hartzer said.
Banks have found it harder and more expensive to obtain funds on the global credit
market since a meltdown in the US housing market - arising from defaults on loans -
caused turmoil in the financial sector and made banks reluctant to lend money to
each other in fear that they may not get it back.
ANZ earlier this week announced cuts to fixed rates for home loans, in light of
market conditions.
The bank said rates for business lending, including agri-business, would be cut
following the recent reduction in the cash rate and would continue to be reviewed.
Deposit rates were also under review.