Banks rebuked over home loan rate cuts

SOME of Australia’s biggest banks are under attack for failing to pass on in full to home loan customers the Reserve Bank’s interest rate cut.

SOME of Australia’s biggest banks are under attack for failing to pass on in full to home loan customers the Reserve Bank’s interest rate cut.

Only one of the nation’s big four banks, ANZ, has followed the RBA’s lead and cut standard variable home loan rates by 25 basis points.

Only ANZ has passed on the rate cut.

ANZ’s rivals, the Commonwealth Bank and National Australia Bank, held back and trimmed their rates by just 20 basis points.

Full details on our latest interest rate changes here: http://t.co/7CpKEHi6hw #ausbiz

— Westpac Bank (@Westpac) May 6, 2015

Westpac late Wednesday announced a cut to its variable rate by 0.22 per cent to 5.48 per cent after the RBA sliced its cash rate by 0.25 per cent to a record low of two per cent on Tuesday.

Here is my statement on today's interest rate cut http://t.co/6P7MHMyLav

— Joe Hockey (@JoeHockey) May 5, 2015

Treasurer Joe Hockey earlier said he will be “very angry” if the nation’s banks don’t pass on the RBA’s rate cut in full.

“The banks are making very good profit and we need our banks to be profitable,” he told reporters on Wednesday.

“But when the Reserve Bank acts, we expect the banks to also act in full as well.”

Reserve Bank calls on banks to pass the rates cut on

ANZ lowered its standard variable rate to 5.38 per cent shortly after the RBA cut.

ANZ reduces rates for retail home loans by 0.25%pa to 5.38%pa, effective this Friday 8 May

— ANZ_Media (@ANZ_Media) May 5, 2015

But CBA and NAB failed to follow suit, with their standard variable rates falling to 5.45 per cent and 5.43 per cent, respectively.

We’re cutting our standard variable rate to 5.43%p.a. – the lowest it’s been since 1978. More: http://t.co/JqQ81fA9Xe

— NAB (@NAB) May 6, 2015

Introducing our lowest ever SVR home loan rate. Our new SVR will be reduced by 0.2% p.a. to 5.45% p.a., effective May 13.

— CommBank (@CommBank) May 5, 2015

CBA also lifted interest rates for two key savings accounts in an attempt to help young people and retirees who have seen the money they make from term deposits fall in line with RBA rate cuts in recent years.

But the bank came under fire from consumer watchdog Choice, which branded as “cynical” its decision not to pass on the full RBA rate cut.

“While we welcome the bank’s decision to raise some deposit interest rates, CBA is hardly on struggle street, and its mortgage customers deserve better,” Choice campaigns and communications director Matt Levey said.

“CBA has plenty of capacity to compete for deposit customers, especially young savers, without engaging in spin and playing them off against mortgage holders.”

Retirees relying on fixed income investments, such as bank term deposits, have come under pressure since the RBA began its latest rate cutting cycle in late 2011.

Since October 2011, the RBA’s cash rate has fallen from 4.75 per cent.

Originally published as Banks rebuked over home loan rate cuts