(Australian Associated Press)
What you could save if banks pass on the cut:
- * Mortgage size: $100,000 – new repayment: $537 – monthly saving: $14
- * $200,000 – $1,073 – $28
- * $300,000 – $1,610 – $42
- * $400,000 – $2,147 – $56
- * $500,000 – $2,684 – $70
- * $600,000 – $3,220 – $84
- * $700,000 – $3,757 – $98
- * $800,000 – $4,294 – $112
- * $900,000 – $4,830 – $127
- * $1,000,000 – $5,367 – $140
* (Source: ASIC. Figures for 25-year standard variable loan at an average new rate of 4.41 per cent, excluding fees)
Banks must pass along full rate cut: Lowe
Reserve Bank Governor Philip Lowe has called on Australia’s banks to pass on the whole of the central bank’s quarter of a percentage point cash rate cut to their mortgage customers, hours after ANZ and Westpac said they won’t.
While Commonwealth Bank and NAB said they would pass the entire 25 basis point reduction, ANZ said it would only reduce its variable mortgage rates by 18 basis points.
Westpac will reduce most variable home loan rates, including those for owner-occupier mortgages, by 20 basis points, although interest-only investors will get a reduction of 35 basis points.
ANZ retail boss Mark Hand acknowledged that many would have hoped to benefit from the full cut, but said the bank also had other considerations.
“While we recognise some home loan customers will be disappointed, in making this decision we have needed to balance the increased cost in managing our business with our desire to provide customers with competitive lending and deposit rates,” he said.
But Mr Lowe said in a speech to the business community that he would break from his usual practice and call for a full pass-through of the rate cut to mortgage customers.
Banks have benefited from a substantial reduction in the cost of raising funds on wholesale markets, Mr Lowe said.
“This means that the lower cash rate should be fully passed through into standard variable mortgage rates,” he said.
“Full pass-through would also mean that the economy receives the full benefit of today’s policy decision.”
NAB chief customer officer Mike Baird said the 0.25 per cent rate reduction would save owner-occupiers making payments on a $400,000 home loan about $744 a year.
“We strongly believe reducing rates is the right thing to do by our customers and reflects our focus on earning trust in the community and rewarding our loyal existing customers,” Mr Baird said.
Sally Tindall, research director at comparison site RateCity, said big banks should now face renewed competition for customers with some smaller lenders already agreeing to pass on the full cut to customers.
“ANZ’s decision to not pass on today’s cut in full is a huge disappointment and now all eyes will on the remaining big banks to see if they can go one better,” Ms Tindall said.