ALL of Australia’s largest banks have disappointed borrowers by refusing to pass on the benefits of this afternoon’s interest rate cut.
While the Reserve Bank of Australia has slashed the cash rate by 25 basis points to a historic low of 1.5 per cent, the Big Four won’t be passing on anywhere close to that.
NAB has announced it will only be passing on 10 basis points to its customers. This takes NAB’s standard variable rate for home loans to 5.25 per cent.
ANZ will cut its rate by 12 basis points while Westpac will reduce its standard variable rate by 14 points.
The Commonwealth Bank will also not deliver the full cut to its home loan customers.
Instead, the bank will reduce its standard variable mortgage rate to by 13 basis points to 5.22 per cent from August 19.
It means customers will save $38.41 a month on a $500,000 loan, $30.73 on a $400,000 loan or $23.05 on a $300,000 loan, according to a Canstar analysis.
By comparison, the average borrower across all lenders stands to save $70.66 a month on a $500,000 loan, $56.53 on a $400,000 loan or $42.40 on a $300,000 loan
“While the circumstances of each RBA rate decision will always vary, we’ve carefully considered the current environment and the needs of both borrowers and savers,” said Matt Comyn, group executive Retail Banking Services.
“Today we’ve reduced our mortgage rates to a record low while increasing term deposit rates to provide an opportunity to the millions of Australians who rely on savings.”
Mr Comyn cited increased funding costs and capital requirements, and the need to “balance the needs of both customers and shareholders”, as the reason for the bank’s position.
He said the three previous rate cuts over the past two years had saved the bank’s owner occupier home loan customers about $939 a year on the average loan of $350,000.
NAB similarly tried to justify its decision. Its chief operating officer, Antony Cahill, said in a statement: “We have to strike the right balance between providing customers with competitive mortgage rates and continuing to generate attractive returns for our 584,000 shareholders, while recognising that NAB’s funding costs have been steadily increasing due to a range of factors, including the need to strengthen our balance sheet.”
NAB said a customer on standard variable home loan with a $300,000 loan will save $18 a month.
Smaller lender Bank Australia was the only bank to announce it was passing on the full rate cut to its customers, which will see their SVR rate fall to 4.74 per cent.