The banks taking the longest to pass on the latest rate cut

Nearly two weeks have passed since the Reserve Bank of Australia revealed it was cutting the cash rate. WHO IS TAKING THE LONGEST TO PASS ON THE CUTS?

Nearly two weeks on from this month’s cash rate cut many lenders are still yet to deliver the latest savings to variable home loan customers.

Of the dozens of financial institutions who have said their rate will fall, NAB’s offshoot UBank and CUA are among the worst offenders who are taking the longest to pass on the drops.

Other banks to drag the chain in delivering the cuts included Virgin Money and the Bank of Queensland who are not passing on the rate drop until October 25.

It comes as Treasurer Josh Frydenberg revealed the Australian Competition and Consumer Commission (ACCC) has been directed to look into why the banks failed to pass on the Reserve Bank’s cuts in full.

Many banks are dragging their heels in passing on the latest RBA rate cuts.

Financial comparison website RateCity’s spokeswoman Sally Tindall said the delay was a clever way for banks to “pocket millions by waiting”.

“Some customers will be frustrated they’re still waiting for their banks to lower their monthly mortgage repayments, especially when other lenders can do it in a matter of days,” she said.

“Not only are a majority of banks only cutting by a fraction of the 0.25 per cent cut, some are also taking several weeks to pass on the savings.”

Big banks ANZ and National Australia Bank both passed on their rate reduction of 0.14 and 0.15 percentage points respectively last Friday.

Westpac is waiting until Wednesday to pass on their 0.15 percentage point cut, but CBA is the slowest, waiting until October 22 to pass on a 0.13 percentage point drop.

A CUA spokeswoman said their long delay in passing on their 0.13 percentage drop was the result of needing to “balance a number of other business considerations”.

She also said the delay allowed time to update their “systems and promotional material” and “completing the necessary testing to make sure the changes are applied correctly to members’ loans”.

UBank passed on the full 0.25 per cent cash rate cut to its customers but has made them wait four weeks to receive it.

The bank’s chief executive officer, Lee Hatton, said the delay was because of a range of factors including “regulation, individual communication with our customers and changes to repayments for our customers”.

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A full 0.25 percentage point cut on a $300,000, 30-year mortgage with a new rate of 3.25 per cent would deliver borrowers savings of $51 per month.

Online home loan platform Lendi’s co-founder David Hyman said whenever a rate cut announcement was made it should prompt customers to review their loans.

“If you haven’t refinanced in the last 12 or 18 months and you don’t know if you’re on the best rates, you should be getting on the phone to your lender or use a platform like ours,” he said.

“We see customers saving about 0.68 percentage points when they refinance with us.”

Mr Hyman urged borrowers to check what rate cut they would receive and then do a comparison to see what else is available.

“There’s rates in the market in the high 2’s for owner occupier principal and interest borrowers, so if you are not close to three per cent you should be demanding that from your bank,” he said.

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CUSTOMERS STILL WAITING

• UBank — October 29

• CUA — October 29

• Virgin Money — October 25

• Bank of Queensland — October 25

• ME — October 24

• Commonwealth Bank — October 22

• Bank Australia — October 22

• Newcastle Permanent — October 22

• HSBC — October 21

Source: Ratecity.com.au.

Originally published as The banks taking the longest to pass on the latest rate cut