Westpac passes on the least of the three cash rate cuts in 2019
The big four banks have failed to pass the rate cuts on in full. But home loan customers are being warned to take action. FIND OUT HOW MUCH YOU WILL SAVE
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Westpac has been crowned the stingiest lender of the big four banks in 2019 by passing on the smallest portion of the central bank’s three cash rate cuts this year.
The bank revealed it was delivering just 0.15 percentage points of the Reserve Bank of Australia’s latest 0.25 per cent rate cut.
Compounding the blow, Westpac held back some of the cuts in June and July when the RBA also reduced the cash rate.
The lender passed on only 0.4 percentage points of the total 0.5 percentage point drop.
So in total Westpac has come out the worst of the big four banks by passing on just 0.55 percentage points of the total 0.75 per cent drops.
Rival lenders the Commonwealth Bank and ANZ tied for second worst, having passed on 0.57 percentage points. The National Australia Bank past on the most cuts at 0.59 percentage points.
And Westpac has left its standard variable rate — the benchmark interest rate which banks apply discounts to — higher than the other big banks at 4.83 per cent.
CBA’s is 4.8 per cent, ANZ’s is 4.79 per cent and NAB’s is 4.77 per cent.
Westpac’s chief executive of consumer David Linberg said the amount passed onto customers came amid serious financial consideration.
“In making the decision, we took into the account the reduction of the official cash rate and the commercial pressures of the low rate environment,” he said in an issued statement.
On a $300,000 30-year mortgage, if a customer is paying the average variable rate of 3.66 per cent, after receiving a full 0.25 percentage point cut, they would save $43 per month in interest charges.
ANZ also passed on only a portion of the latest rate cut, announcing shortly after Westpac that it would give customers only a 0.14 percentage point reduction to most variable loans.
MORE: Greedy banks hold back more rate cuts
Despite this the bank’s group executive of Australia retail and commercial Mark Hand said ANZ wanted to make sure it helped rev up the economy.
“While we recognise many customers will use this an opportunity to pay down their existing home loan faster we hope this provides the economic stimulus the Reserve Bank is wanting to generate,” he said in a statement.
Aussie Home Loans’ chief executive officer James Symond urged borrowers to review their rates.
“If your lender doesn’t come to the party, get on the phone to your mortgage broker who could find you a better deal,” he said.
Financial comparison website RateCity’s spokeswoman Sally Tindall warned Australians not to “take it lying down” that their lenders had failed to pass on the full cuts.
“You can’t rely on the banks to pass these cuts on, you can rely on them to protect their profit margins ahead of customers,” she said.
“But if enough people started switching, they would stand up and listen.”
BIG FOUR BANKS’ STANDARD VARIABLE RATES
How much they’ve passed on from last three rate cuts
• ANZ 4.7%, 0.57 percentage points
• CBA 4.83%, 0.57 percentage points
• NAB 4.77%, 0.59 percentage points
• Westpac 4.83%, 0.55 percentage points
HOW MUCH WILL YOU SAVE ON YOUR LOAN?
CBA
$300,000
Old rate - 4.93 per cent
New rate - 4.80 per cent
Monthly difference - $24
Annual difference - $282
$500,000
Old rate - 4.93 per cent
New rate - 4.80 per cent
Monthly difference - $39
Annual difference - $473
$1,000,000
Old rate - 4.93 per cent
New rate - 4.80 per cent
Monthly difference - $79
Annual difference - $946
WESTPAC
$300,000
Old rate - 4.98 per cent
New rate - 4.83 per cent
Monthly difference - $27
Annual difference - $328
$500,000
Old rate - 4.98 per cent
New rate - 4.83 per cent
Monthly difference - $46
Annual difference - $547
$1,000,000
Old rate - 4.98 per cent
New rate - 4.83 per cent
Monthly difference - $91
Annual difference - $1094
NAB
$300,000
Old rate - 4.92 per cent
New rate - 4.77 per cent
Monthly difference - $29
Annual difference - $349
$500,000
Old rate - 4.92 per cent
New rate - 4.77 per cent
Monthly difference - $48
Annual difference - $582
$1,000,000
Old rate - 4.92 per cent
New rate - 4.77 per cent
Monthly difference - $97
Annual difference - $1164
ANZ
$300,000
Old rate - 4.93 per cent
New rate - 4.79 per cent
Monthly difference - $25
Annual difference - $306
$500,000
Old rate - 4.93 per cent
New rate - 4.79 per cent
Monthly difference - $42
Annual difference -$509
$1,000,000
Old rate - 4.93 per cent
New rate - 4.79 per cent
Monthly difference - $85
Annual difference - $1019
Source: RateCity.com.au
Originally published as Westpac passes on the least of the three cash rate cuts in 2019