Big banks including CBA and NAB deny customers full rate cuts on their mortgages

The latest cash rate cut has failed to be passed on in full to millions of mortgage customers but the big banks have explained why. Read their responses and take our poll.

• Rates ‘will fall to 0.25 per cent within months’
• Reserve Bank warned rate cut could ‘do harm’

Home loan customers are getting dudded by the big four banks by failing to reap the full benefit of the latest cash rate cut.

Reserve Bank of Australia governor Philip Lowe slashed the cash rate by 0.25 per cent on Tuesday, bringing it down to a record-low of just 0.75 per cent.

And economists are forecasting more cuts are on the horizon.

So why are the nation’s biggest banks holding back some of the latest cut?

1) Commonwealth Bank

● Cut most home loan products by 0.13 percentage points

● New standard variable rate — 4.8 per cent

● Latest annual profit: $8.6 billion.

● Rates effective: October 22.

CBA’s executive of retail banking services Angus Sullivan said the bank has been unable to hand over the full rate cut because of a “balancing act”.

The Commonwealth Bank’s executive of retail banking services Angus Sullivan said explained why the bank is unable to pass on the full rate cuts.

“As the Reserve Bank cash rate has reached record lows, we face a difficult balancing act between the multiple, valid interest of our stakeholders,” he said in an issued statement.

“Particularly given it is currently not feasible to pass on the full rate reduction to more than $160 billion of our deposits which are at, or near, zero rate.”

He went on to explain how they needed to manage the needs of 6 million savings customers and 1.6 million home loan customers, as well as keeping their shareholders happy.

For owner occupier customers paying principal and interest, the SVR has dropped by 0.57 percentage points — delivering savings of about $140 per month on a $400,000 home loan.

2) National Australia Bank

● Cut on most loan product products by 0.15 percentage points

● New standard variable rate: 4.77 per cent

● Latest annual profit: $5.5 billion

● Rates effective: October 11.

NAB’s chief customer officer of consumer banking Mike Baird was more reserved than CBA and skirted around the fact the bank did not pass on the cuts in full to borrowers.

He highlighted the fact the bank drop investor interest-only rates by 30 percentage points — double of what was offered on all other types of variable mortgages.

“We acknowledge our housing investors paying interest-only have some of the highest rates, which is why we have decided to cut their rate by 30 basis points,” Mr Baird said in a statement.

NAB’s chief customer officer of consumer banking Mike Baird explained how the bank wants to remain competitive in the home loan market.

“While these changes further support our 930,000 home loan customers, we are aware of the growing impact reductions in interest rates have on our 3 million savings and investment customers and will continue to offer competitive interest rates on savings and term deposits.”

For owner occupier customers paying principal and interest, the SVR has dropped by 0.59 percentage points — delivering savings of about $145 per month on a $400,000 home loan.

3) ANZ

● Cut on all variable rate loan products by 0.14 percentage points

● Standard variable rate: 4.79 per cent

● Latest annual profit: $6.4 billion

● Rates effective: October 11.

ANZ’s group executive of Australia retail and commercial Mark Hand also said the said it was a balancing act to manage the needs of customers in a low rate environment.

“We were able to match the full rate reduction in July and the majority in June, however the dynamics of record low interest rates has resulted in a reduction in variable home lending rates of between 0.14 per cent and 0.25 per cent this time around,” he said.

“While we recognise many customers will use this as an opportunity to pay down their existing home loans faster, we hope this provides the economic stimulus the Reserve Bank is wanting to generate.

For owner occupier customers paying principal and interest, the SVR has dropped by 0.57 percentage points — delivering savings of about $140 per month on a $400,000 home loan.

40) Westpac

● Cut on all variable rate loan products by 0.15 percentage points

● Standard variable rate: 4.83 per cent

● Latest annual profit: $8.1 billion

● Rates effective: October 16.

Westpac’s chief executive of consumer David Lindberg sighted the “commercial pressures” of not being able to pass on the rate cut in full.

“In making the decision we took into account the reduction of the official cash rate and the commerical pressures of the low rate environment,” he said in a statement released today.

“Providing the support and finance to help Australians into their homes is a core part of our business strategy.”

For owner occupier customers paying principal and interest, the SVR has dropped by 0.55 percentage points — delivering savings of about $135 per month on a $400,000 home loan.

@sophieelsworth

WHO HAS MOVED SO FAR?

• Athena -0.25%

• Auswide Bank -0.25%

• ANZ -0.15%

• Bank of Melbourne -0.15%

• BankSA -0.15%

• Bankwest -0.13%

• Commonwealth Bank -0.13%

• Freedom Lend 0.25%

• Homestar -0.25%

• Macquarie -0.15%

• NAB -0.15%

• RACQ Bank -0.15%

•RAMS -0.15%

• Reduce Home Loans -0.2%

• Suncorp -0.15%

• St George Bank -0.15

• UBank -0.25

• Westpac - 0.15%

Source: Ratecity.com.au