Why ANZ can’t vary home loan pricing

Angus Kidman 24 March 2017

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Interest-only loans are scoring the same rates as full repayment deals.

Banks and financial institutions run gigantic IT systems, but that doesn't always mean that they're suitable for the task at hand.

For instance, it turns out that ANZ currently can't charge different rates to borrowers who are paying off only the interest on their loans rather than the interest and the principal.

Technological limitations within its systems mean that ANZ has to charge the same rate for interest-only and interest-plus-principal, the AFR reported earlier this week. The bank does charge different rates for owner-occupiers and investors, which is standard practice across most lenders, but within those categories its own technology doesn't allow it to charge different rates.

While this might seem an odd omission, it isn't necessarily a surprising one. Banking IT systems are generally much more Frankenstein than Ferrari, patching together components from different eras. Much of what still runs in the major banks is code that was originally developed in the 1990s.

Add to that the complex approval processes required for any changes and the general lack of speed inherent in any large organisation and it's sometimes surprising that the online banking experience is as good as it is.

That lack of flexibility might help explain why ANZ hasn't yet joined the other Big Four banks in making tweaks to its home loan rates in recent weeks. Given the higher level of risk involved with interest-only loans for owner-occupiers, however, it's something that's bound to be fixed eventually.

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears Monday through Friday on finder.com.au.

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