Australia and New Zealand Banking Group (ANZ) has retracted its plans to introduce so-called tracker mortgages after ANZ’s research showed that only about 10% of variable-rate customers would consider switching to a tracker mortgage.
Speaking at the House of Representatives committee’s review of the major banks yesterday, Shayne Elliott, chief executive officer of ANZ, said his bank had carefully considered introducing tracker rates to the consumer market.
“In part, this reflects price. We cannot fund the bank with tracker deposits and this risk needs to be priced for,” Elliott said. “Launching trackers would therefore be commercially unattractive, and make us more complex. That said, we will continue to assess demand.”
Tracker mortgages are variable-rate home loans that remain at a constant level above the official cash rate and “track” the Reserve Bank’s cash rate movements. In October, Queensland’s Auswide Bank reintroduced the rate tracker mortgage to the Australian market, prompting speculation that other lenders might follow suit.
Greg Medcraft, chairman of the Australian Securities and Investments Commission (ASIC), had previously called for the introduction of tracker rates, which he said would ensure clearer and more transparent pricing in the lending market.
However, tracker rates are not without their detractors: Andrew Throburn, group chief executive officer of NAB, said they could potentially heighten the risks faced by banks.
Elliott also championed ANZ’s cutting of interest rates on credit cards, following a commitment he made to members of parliament at a hearing in October. It contrasts with CBA’s Ian Narev refusing to consider lowering interest rates just hours earlier.
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