The anchor on the five-metre vessel became snagged in the harbour about 2pm.

The men reacted, placing the boat into reverse, but water quickly spilled into the hull forcing it to sink in front of dozens of onlookers at the foreshore.

Owner Daniel Janceski from Thomastown said the $10,000 boat was likely to be written off.

He said he was thankful to be okay.

"We were out on the bay and the anchor got caught," Mr Janceski said.

"It just happened suddenly. We're both good swimmers."

The pair arrived in Warrnambool for an overnight fishing trip and to visit family but will spend the afternoon attempting to salvage the vessel instead.

s.mccomish@fairfaxmedia.com.au