For the second time this year the Reserve Bank of Australia has announced a 25 basis point rate drop, bringing the official cash rate down to a record low 2%.
But unlike the first rate reduction back in February where most providers were quick to pass on the full rate cut to their customers, this time round many home loan providers have tightened their belts and failed to pass on the full savings to customers or have made no rate call altogether yet.
In fact, according to Mozo’s home loan database only a low 19% of providers have passed on the full RBA rate cut, which leaves 81% of home loan lenders either opting for a portion of the reduction or are yet to announce their decision.
We found it was mainly the smaller providers that decided to play nice this RBA rate cut, with the following lenders passing on the full 25 basis point cut:
HSBC: Variable Home Loan 5.45% from 18 May
Greater Building Society: Getaways Home Loan now 5.00%
ME Bank: Flexible Home Loan 4.88% from 22 May
Loans.com.au:Dream Home Loan Offset Variable now 4.02%
ANZ: Variable Rate now 5.38%
Our database shows many banks only passed on a 20 basis point reduction, including the Commonwealth Bank, NAB, St. George, the Bank of Queensland, Bendigo Bank, Citibank and Newcastle Permanent.
Big four bank Westpac decided to be slightly more generous rewarding customers with a slightly higher rate reduction of 0.22%, whereas Bankwest passed on the lowest portion of the RBA’s 25 basis point rate cut of just 0.17%.
See here for our full naughty and nice list.
While the above players were quick to announce some form of rate reduction, many smaller credit unions and mutuals have so far stayed quiet on whether they will follow the RBA’s direction or choose their own rate cut amount, including Credit Union SA, Gateway Credit Union, Illawarra Credit Union, Queenslanders Credit Union, Community Mutual Group and QT Mutual Bank.
Switch of course. By refinancing a $300,000 mortgage from the average variable rate home loan that currently sits at 4.88% to Mozo’s Mystery Bank deal of 3.99% you would save $45,302 in interest over a 25 year loan.
If you’d like to find out home much you could save, have a chat with our free home loan negotiator about your switching options.