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ANZ keeps lending rates on hold


ANZ Banking Group has opted to keep its home loan rates on hold after the Reserve Bank of Australia's decision to not cut the cash rate in July.

ANZ said its standard variable interest home loan rate would remain at 6.8 per cent and its small business loans steady.

The decision was made at ANZ's monthly interest rate review meeting on Friday.

ANZ chief executive Australia Philip Chronican said the decision to keep lending rates on hold was made despite the higher funding costs facing the bank.

He said as ANZ needed to remain competitive, it chose to keep rates on hold.

"We know that many Australians are feeling uncertain about the global economy and with household budgets under increased pressure this was another factor in our decision this month," he said in a statement.

The Reserve Bank on July 3 held the cash rate at 3.5 per cent after cuts in the two previous months.

The central bank had previously cut the cash rate by half a percentage point in May, and a quarter of a percentage point in June, citing instability in Europe and a mixed outlook for domestic growth.

Mr Chronican said while offshore funding markets used by the banks to source money to lend to customers had begun to stabilise, the situation still remained volatile.

Competition between Australian banks to attract savers also remained strong, particularly with term deposits.

He said while customers benefited from the competition, which has lifted interest rates on savings accounts, it was putting pressure on ANZ's margins.