ANZ ATM Bank
Fixed rates for owner-occupier were slashed by up to 0.60% points and for investors by up to 0.70% points. Wikimedia Commons

ANZ is the latest to join Australia's major banks offering fixed-rate home loans below 6%, as the lender announced it will lower rates by up to 0.70 percentage points across one- to five-year terms.

Fixed rates for owner-occupier were slashed by up to 0.60 percentage points and for investors by up to 0.70 percentage points. After the rate cut, the bank's lowest fixed rate is just under 6% at 5.99%, with two- and three-year terms available to owner-occupiers paying principal and interest, and a 20% deposit, eligible for a rate of 5.99%, 9News reported citing Canstar.

ANZ revision in rates comes after NAB announced rate cuts on Oct. 8 and July 22, CBA on Aug. 23, and Westpac on Aug. 21

"For months, ANZ held out on changing fixed rates when the other majors were busy making cuts, but the bank has now gone and made the chop," Canstar data insights director Sally Tindall said.

According to Canstar's report, 42 lenders have reduced their fixed rates in the last month, with the lowest fixed rate on the market being 4.99% on a three-year term offered by SWS Bank.

Tindal pointed out that competition among the four lenders is putting pressure on others to lower their rates, adding that market can expect more cuts in the lead-up to Christmas.

"In just one week we've seen two of the big four banks drop fixed rates but the cutting cycle isn't likely to be over just yet. Banks might be responding to the cost of wholesale funding but there are other factors at play, including the high chance the RBA will start cutting the cash rate in 2025."

However, the lowest fixed rates offered by the big Four banks is still higher than Arab Bank Australia Limited's (ABAL) market-leading 5.75% variable rate. This suggests that customers on a lower variable rate would likely benefit more than those switching to a low fixed rate with one of the Big Four, especially if the Reserve Bank of Australia (RBA) cuts rates by 100 basis points next year as predicted, without offering further relief in 2026.

Westpac chief economist Luci Ellis said the RBA interest rates are expected to be higher in the 2020s compared to the 2010s, although rate cuts are more likely next year.

"Real rates have trended down for decades, but a very long-term view supports our thesis that rates will average higher in future than they did pre-pandemic," she said.

In August, the headline inflation dropped to 2.7%, while the annual underlying inflation remained at 3.4%, still above the RBA's target range of 2% to 3%.