ANZ leaves mortgage rates unchanged as economists remain divided on August rate cut

ANZ has left its variable interest rates unchanged today following its July independent interest rates review as economists remain divided about whether the RBA will cut rates on August 7.

The latest Bloomberg survey of economists found that 13 out of 24 expect the RBA to cut the cash rate to 3.25% on August 7 (unchanged from a week ago) with the rest expecting the cash rate to remain unchanged at 3.5%.

ANZ's standard variable rate remains at 6.80% the same as that of the Commonwealth Bank and just above NAB at 6.78%, which has pledged to offer the lowest standard variable rate among the Big Four throughout 2012.

Westpac remains the outlier with a standard variable rate of 6.89%.

ANZ CEO Australia Philip Chronican says the bank left variable mortgage rates unchanged “despite funding costs remaining elevated”.

Chronican says competition for deposits remains strong and is continuing to put pressure on margins, while “recent news from Europe has helped somewhat in stabilising offshore funding markets”.

Among the 24 economists surveyed by Bloomberg, the major banks are neatly divided with Westpac and Commonwealth Bank expecting a rate cut on August 7 and NAB and ANZ expecting the RBA to hold firm.

ANZ is pencilling in two 25 basis point rate cuts for October (previously August) and November this year.

Yesterday ANZ said the small increase in the June unemployment rate to 5.2% was unlikely to cause too much concern for the RBA.