The $37.8 million question for Australia’s big banks

Last week Australia’s big four banks were quick off the mark announcing they would be passing on the full Reserve Bank rate decrease (bar NAB, who only dropped its rate by .20%). This was welcome news for most homeowners and some good PR for the banks, particularly the Commonwealth Bank, which seemed to have taken heed from the massive fallout from its supersized interest rate rise last November.The reality is that the banks’ home loan customers will not see their interest rates drop until an average nine days after the official rate cut. The Commonwealth Bank has passed on its rate cut in record speed of just three days but its peers are not so generous. NAB took six days to pass on the cut, while new rates for ANZ and Westpaccustomers only come into effect from 14 November, almost two weeks after the Reserve Bank announcement.Analysis by Mozo’s rate chasers reveals that if the Big 4 had passed on their home loan rate cuts two days after the announcement (which they managed to do in May 2010 when passing on a rate rise) borrowers would collectively pay $37.8 million less interest.It does seem rather odd that at a time when the Occupy protest movement is front page news championing for social and economic equality, Australia’s big banks would be so blatant about gauging their customers.Maybe there is a plausible explanation? Can anyone answer the $37.8 million question? Why does it take longer for banks to pass on rates cuts than sting customers with rate rises?

The $37.8 million question for Australia’s big banks was last modified: June 29, 2015 by Kylie Moss

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  1. Whilst I can’t speak for ANZ or NAB, Westpac have been quick to point out that the delay of 10 days to implement the cut is the exact same timeframe they took to implement the last rate rise.

    As long as they’re consistent on both it’s hard to argue that it’s not equitable however I still find it suprising that considering the modern technology available to banks it takes any longer than 3 working days to implement.

    1. Mozo

      Interesting that Westpac is quick to point out the consistency of their implementation times of the recent cut with the last rate rise. Our analysis shows that since October 2009 Westpac has repeatedly been the worst offender taking an average of 13 days to pass on rates cuts but just five days to pass on rate rises.


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