The big four say they won't follow non-banks' lead on variable mortgages
Australia’s largest banks have refused to pass on the Reserve Bank’s emergency cash rate cut, denying thousands of borrowers the relief of lower mortgage repayments, according to a report by The Australian.
ANZ, Westpac, NAB and Commonwealth Bank all announced Wednesday that they would not change the interest rates on their standard variable-rate mortgage products after the RBA cut the official cash rate to 0.1%, The Australian reported. Nonbanks like Athena Home Loans and homeloans.com.au, meanwhile, have announced they will pass on the full cut to their borrowers.
Labor Treasury spokesman Jim Chalmers said it was “clear that many households and borrowers desperately need the banks to pass through the RBA’s latest rate cut.”
The major banks will cut fixed home loan and business lending rates following statements from RBA Governor Philip Lowe and Treasurer Josh Frydenberg about business investment’s importance in driving economic recovery, The Australian reported.
Lowe said Tuesday that he would “expect and hope” for the cash rate reduction to be passed on to all borrowers. However, he also told borrowers that they should be more active in negotiating with their lenders – or, if that doesn’t work, take their business elsewhere.
“The best outcome would be for standard variable rates to be lower,” Lowe said. “But if that doesn’t happen, I am confident there will be pass-through occurring through people negotiating switching. … I would encourage everybody to go ask their bank for a better deal … and if they don’t give it to you, switch to a bank that will.”
However, major banks worry that cutting mortgage rates will encourage customers to withdraw their deposits, The Australian reported.
Former ANZ chief economist Warren Hogan told the publication that banks were trying to protect their revenue from deposits. “There is still room for fixed mortgage rates to come down even further due to competition … the banks have flexibility on this,” he said. “The banks have various lending and deposit interests and they have to be quite discriminatory on how they apply cuts.”
