CBA won’t cut standard variable mortgage rates after RBA cash rate decision

One of Australia’s banking giants has responded to the Reserve Bank’s drastic interest rate cut – and it’s left nervous customers fuming.

The Commonwealth bank has left variable rates unchanged after the RBA’s historic cash rate cut Thursday.

The banking giant responded soon after the central bank revealed it was slashing the cash rate from 0.5 per cent to 0.25 per cent in response to the growing coronavirus pandemic.

RBA governor Philip Lowe announced the cut at 2.30pm, explaining the public health crisis was also “having a very major impact on the economy and the financial system”.

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The Commonwealth Bank was the first of the big four to react, revealing it would not cut standard variable mortgage rates in response to the Reserve Bank's move.

In a statement, CEO Matt Comyn said the bank recognised it was a “very concerning time for our customers and the community” and that we were living in “unprecedented times” which called for “unprecedented measures”.

“We are focused on delivering the best possible service to all of our customers and supporting the Australian economy,” he said.

“Our branch network is open, our call centres are open, and we are helping our customers use our market-leading digital technology to do their banking through Netbank and through the CommBank app.

RBA governor announced the historic cut this afternoon. Picture: David Gray/AFP

“Following today’s reduction in the official cash rate by 25 basic points (bps) we are taking deliberate steps to further support parts of the economy most in need. In particular, we want to ensure that we help keep small businesses open so that they can keep Australians employed, and that we do everything we can to support households and older Australians.”

The bank announced a 100 bps interest rate reduction for all existing cash-linked small business loans, a 60 bps increase in 12-month term deposits to 1.70 per cent per annum, a 70 bps interest rate reduction in one, two and three year fixed home loan rates for owner occupiers paying principal and interest to 2.29 per cent per annum and changes to home loan repayments which will release up to $3.6 billion in cash for Australian households.

Australian’s took to social media to vent their frustrations over the decision.

“How in hell can you possibly justify this? Time to get off my backside and look around, sick of this treatment,” one CBA customer posted on Twitter, while another added: “The Reserve Bank announces an emergency rate cut and then they decide not to pass it on to consumers! People are out here losing their jobs and lives. Absolutely disgusting behaviour by these disgusting banks.”

“No cut to existing variable loans. Third or fourth time they’ve pulled this stunt,” another posted.

CommBank’s decision comes as Treasurer Josh Frydenberg said banks were “working with small business customers to make sure that money is available” and explaining that “extraordinary times call for extraordinary measures”.

The Treasurer said there will be a "second package" for Australians, and while there are no details available yet, it seems likely it will be even bigger than the first one announced recently.

"Our second package will be substantially different to the first package," Mr Frydenberg said.

"In fact, since that time, we have seen the economic impact, globally as well as here in Australia, become much more significant than was evident even just a week or two weeks ago.

"And so our second package is designed to support, in the words of the Prime Minister, to cushion the challenge being faced by many Australians through this. That includes backing small business."