This week, the Reserve Bank cut the official cash rate for the third time since June, to a historic low of 0.75%.
In reasonably quick succession, the Big Four Banks Westpac, ANZ, CBA and NAB, cut their variable home loan rates by 0.13% and 0.15% respectively. These cuts will start to take effect from 11 October when NAB and ANZ pass the lower rates onto their customers.
Paul Marshall, chief executive at financial comparison website RateCity.com.au, said: “The Big Four Banks have only chosen to pass on a fraction of the rate cuts. Although disappointing, it’s not unexpected.
“The banks have gone against the Treasurer’s wishes by passing on just 0.14% of the RBA’s rate cut on average, and home loan customers will rightly feel frustrated at this decision.
“New customers are still getting the sharpest home loan rates, so if you’re not happy with what your bank has passed on you can get yourself a better rate cut by taking your business elsewhere.”
Over the course of a year, RateCity has calculated that Westpac’s decision to only pass on a 15% cut will cost owner-occupiers $290 annually if they are paying principal and interest on a $400,000 standard variable loan over 30 years. It will be $318 for ANZ customers, according to RateCity.
Tim Brown, Manager of Our Broker, said, “Now the Big Four Banks have all made their move, we expect the smaller lenders, including the credit unions and building societies to follow suit.”
For example, there are several non-bank and mutual lenders now offering rates below 3% p.a. “However, you need to be careful as some of these introductory rates are only offered for a year then resume to a rate above 3%,” cautioned Tim.
“Our Broker is well placed to help new and established borrowers find the best deals in the marketplace. However, better still, we can handle all the paperwork and make the application for a new loan or a refinance a much simpler process for the borrower.
“Our Broker is dedicated to bringing you current mortgage products and interest rates from over 35 of the best residential and commercial lenders Australia has to offer.
“We deal directly with the lenders on your behalf and will guarantee to find you the best product and rate to suit your individual needs,” Tim concluded.