Pressure mounts on big four banks to cut rates sooner

Macquarie Bank has fast-tracked passing on the RBA rate cut to its customers, laying down a challenge to big four rivals. See how long your bank will take to pass on rate cuts.

There’s a big difference between banks when it comes to when they’ll give you an interest rate cut on your home loan.

The nation’s fifth biggest home lender, Macquarie Bank, has thrown down the gauntlet to its bigger rivals, warning homeowners their bank is making millions of dollars at their expense by delaying passing on this week’s RBA rate cut.

The RBA cut rates by 0.25 percentage points on Tuesday, the second rate cut this year, pushing the cash rate below 4 per cent for the first time in two years.

Analysis by Canstar shows a vast difference between lenders, with the slowest bank taking 27 days to pass the rate cut along whereas online players Athena and Unloan passed it on the day the cut was announced.

Westpac will take 14 days while ANZ, CBA and NAB will take 10 days to deliver the cut.

Macquarie previously took 10 days but has slashed the time to pass it to customers to three days, with the cut effective on Friday.

Canstar’s analysis shows Homestar Finance was the slowest to pass on the cut, with customers not receiving the benefit for 27 days.

Macquarie Bank head of Personal Banking Ben Perham says speed has become the new battleground in Australian banking as he warned that banks withholding the cut were making millions from their customers.

“What few customers realise is that when their bank is quick to cut their savings rate, and much slower to reduce their home loan rate, their bank is making millions of dollars per day from customers,” Perham says.

“Customers tell us they’re frustrated when they see a quick announcement from their bank following the RBA’s decision but have to wait weeks to get the benefit.”

He pointed out that Macquarie was not “encumbered by legacy technology” so it could be more responsive to what customers want, which included fast transactions.

It’s opening up a battlefront in the mortgage market.

Home loan specialists say new digital finance technologies should make reducing rates much faster for banks, although they note similar timing delays have occurred with rate rises too.

A new analysis by research group Canstar has found in recent years that banks have kept a “relatively consistent time frame” for passing on RBA rate rises and cuts.

Canstar data insights director Sally Tindall said delays frustrated customers who “want the relief now” and the bigger players could do a better job.

“The big banks will tell you it’s their legacy platforms which are complicated and have been built over decades. They also have a significant volume of customers, so apparently it’s not as easy to change rates quickly,” Tindall says.

“That said, if you go back 10 or 15 years in the history books, you’ll find instances where CBA and ANZ have taken three days to pass on a cash rate hike. I don’t know how much they can hurry up but I suspect they can hurry up a little bit.”

She says the banks were passing on the cuts within the same time frame that they passed on the recent rate hikes.

“So all things considered it’s in borrowers’ favour at this point in time, however it’s still a bug bear for many borrowers,” Tindall says.

“It’s terrific to see Macquarie stepping up for its customers where it can.”

Oracle Lending Solutions managing director Angelo Benedetti says some smaller and nimbler lenders were shortening their time frames for passing on rate cuts, and he believed the bigger banks should be faster.

Benedetti says this week a bank did a loan pricing for him within 30 seconds.

“Some banks do drag it out for 10 days because that way they make more money,” Benedetti says.

He says new technology should enable banks to move faster.

“It’s not a priority, but with the technology they have got these days and the introduction of AI they should be able to do it,” Benedetti says.

“I think there will be a lot more competition going forward. We have seen our inquiry level has increased a lot in the last two days.”

The founder of mortgage broker Two Red Shoes, Rebecca Jarrett-Dalton, says she has seen a 30 per cent surge in inquiries in recent weeks “from a broad range of buyers”.

Jarrett-Dalton says the rate cut delay was “tied up in a lot of waffle, but essentially there’s not a lot you can do about it”.

“You aren’t going to refinance to chase the shorter notice period,” she says.

“Modern technology should make it an instant switch. Some of these big guys pride themselves on their tech.”

Originally published as Pressure mounts on big four banks to cut rates sooner