Reserve Bank of Australia drops the cash rate to two per cent
HOMEOWNERS will have about $47 more in their pockets a month thanks to today’s interest rate cut — but the Commonwealth Bank kept some of the cut for itself.
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HOMEOWNERS will have about $47 more in their pockets a month thanks to today’s interest rate cut — and ANZ is the first of the big banks to pass it on to customers.
The Reserve Bank of Australia slashed rates for the second time in 2015 with the cash rate plummeting to a record low of two per cent after the latest fall of 25 basis points.
Just over an hour later ANZ said its variable retail home loan rates will fall by 25 basis points from May 8.
“We hope by announcing this decision today we’re able to provide certainty for our customers looking to manage their household budgets as well as playing our part in supporting the broader economy,” ANZ Australia chief executive Mark Whelan said.
Despite the ANZ passing on cut in full — and fast — the Commonwealth Bank kept some of the latest cut for itself by only lowering its variable rate by 0.2 per cent.
In justifying its decision to only cut by 0.2 per cent, CBA’s Group Executive Retail Banking Services Matt Comyn said it has “also considered the needs of the almost 7 million Australians who have savings accounts with us”.
The bank said it was raising its eight-month term deposit rate by 0.55 per cent to 3.05 per cent.
Figures by financial comparison website Finder.com.au show on a $300,000 30-year home loan the average standard variable rate is 5.25 per cent and the monthly repayments are $1667.
The latest drop will see an additional $47 in customers’ hands.
Loans.com.au was the first of the lenders to pass on the rate cut in full to its variable rate loans.
Its Essential home loan deal rate has fallen from 4.23 per cent to 3.98 per cent.
The lender said the rate cut will become effective immediately for new customers but have not yet confirmed when the rate will be passed on to existing customers.
Now all eyes will be on the other financial institutions today to see who else passes on the rate falls.
The news comes just one week out from the delivery of the nation’s Federal Budget by Treasurer Joe Hockey which is expected to be a tamer budget than in 2014.
Mr Hockey said the rate cut will help stimulate the economy and create more jobs.
“Now is the time to borrow and invest ... invest in the things that help to create jobs,” Mr Hockey told reporters in Canberra.
Mr Hockey said there were many green shoots in the economy.
“This interest rate cut will help to facilitate those green shoots,” he said.
“It’s as much about putting fertiliser on the green shoots as anything else.”
He said the budget to be delivered next Tuesday would further boost the economy with a record spend on infrastructure and a small business package.
“I would say to the business community, `go out and invest and create more jobs’,” he said.
“We will do everything we can to facilitate that sort of investment.”
He says the budget to be delivered next Tuesday will further boost the economy with a record spend on infrastructure and a small business package.
Originally published as Reserve Bank of Australia drops the cash rate to two per cent
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