Big banks have pocketed an extra $4.7 billion by not passing on full cuts
The RBA has shaved another 0.25% off the cash rate - the third time this year it’s done so - and all attention has turned to home loan lenders to see how they’ll respond. Among the big four banks, CommBank and NAB have already announced cuts of 0.13% and 0.15%, respectively.
But how likely are the rest of the big banks to pass on the full cut? If we consider how much they’ve saved by withholding some of the cut in previous months, we’d advise against getting your hopes up.
Since 2016, ANZ, CommBank, NAB and Westpac have collected approximately $167 million per month in additional revenue by withholding part of official rate cuts. That adds up to a staggering $4.7 billion in total.
“This year alone ANZ and Westpac have pocketed a $279 million annual windfall by holding back some of the official rate cuts, it’s easy to see why the other major might consider not passing the cut on in full,” said Mozo Director Kirsty Lamont.
“As well as holding back a portion of the official cut, the big banks all delayed the effective dates of their rate relief. A move that saw them collectively bank $434 million.”
How likely are banks to pass on the full cut?
Back in June, there was a lot of pressure on lenders to pass on the cut in full, and most followed through. Of the 76 providers in our database, 48 reduced variable rates by 0.25%.
But by July, that enthusiasm had started to dwindle. Just 13 lenders passed on the full amount following July’s cut, while 63 passed only part of it. Going forward, it’s likely we’ll see more of the same as banks’ net interest margins are squeezed tighter and tighter.
“It’s clear the big banks’ are under pressure. Faced with record low interest rates and higher cost structures than their more agile online competitors, it could soon make it uneconomical to pass on any cuts to the cash rate,” Lamont says.
“With a potential fourth 25 basis point cut likely later this year or early 2020, the amount of money the big banks can earn in interest on loans compared to what they are paying to savers will get very tight.”
Online lenders are the ones to watch
While the big banks drag their feet or cut only small amounts, a handful of online lenders have wasted no time in passing on the full rate cut to their variable home loan customers. Athena Home Loans was first out the gate, announcing it would be offering owner occupiers rates as low as 2.84% p.a. (2.80% p.a. comparison rate*).
Homestar followed with cuts of its own, leaving its home loan line-up looking that much more impressive. Right now, the Homestar Star Essentials offers variable rates as low as 2.74% p.a. (2.77% p.a. comparison rate*).
As for Reduce Home Loans, it only passed on a portion of the cut (0.20%), but its range of variable rate home loans is looking sharper than ever. Its Low Rider home loan currently comes with a super low rate of 2.69% p.a. (2.71% p.a. comparison rate*), making it one of the best value home loans in our database.
“For years online lenders have been offering more competitive variable interest rates than our major banks and with more official rate cuts on the horizon the gap looks to widen even further,” said Lamont.
“If you are looking to reduce your loan repayments as soon as possible, it pays to compare rates and switch to the lender offering the most competitive rate you can find.”
So whether you’re looking to buy a home or refinance an existing home loan, now is a good time to be looking around. Browse the selection below, or head over to our home loan comparison page for an idea of the kinds of rates currently out there.
And if you’re wondering how much of the cut your lender has passed on, be sure to check out our Naughty or Nice table, where we’ll be keeping track of lenders’ decisions as they come in.
Home loan comparisons on Mozo
Promoted
-
Unloan Variable
- Owner Occupier
- LVR <80%
- Interest rate
-
5.99
%
p.a.
Variable
- Comparison rate
-
5.90
%
p.a.
- Initial monthly repayment
-
$2,995
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- Interest rate
-
5.99% p.a. (5.90% p.a.*)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$0
- Ongoing fees
-
$0.00
- Discharge fee
-
$0.00
- Package
-
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $10,000
- Maximum borrowing amount
- $10,000,000
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Minimum redraw amount
- -
- Offset account
- no
- Split account
- no
- Other restrictions
- -
- Other benefits
- Rate discounted by 0.01% p.a. every year up to a maximum discount of 0.30% p.a..
- Special offers
- -
Read reviews and learn more about Unloan home loans
Go to site
-
Unloan Variable
- Owner Occupier
- LVR <80%
- Interest rate
-
5.99
%
p.a.
Variable
- Comparison rate
-
5.90
%
p.a.
- Initial monthly repayment
-
$2,995
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- Interest rate
-
5.99% p.a. (5.90% p.a.*)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$0
- Ongoing fees
-
$0.00
- Discharge fee
-
$0.00
- Package
-
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $10,000
- Maximum borrowing amount
- $10,000,000
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Minimum redraw amount
- -
- Offset account
- no
- Split account
- no
- Other restrictions
- -
- Other benefits
- Rate discounted by 0.01% p.a. every year up to a maximum discount of 0.30% p.a..
- Special offers
- -
Read reviews and learn more about Unloan home loans
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Discounted Home Value Loan
- Owner Occupier
- Principal & Interest
- LVR <60%
- Interest rate
-
5.99
%
p.a.
Variable
- Comparison rate
-
5.99
%
p.a.
- Initial monthly repayment
-
$2,995
Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Receive $3,288 cashback when you refinance an existing home loan. Minimum loan amount of $250,000, settle within 120 days from applying.
- Interest rate
-
5.99% p.a. (5.99% p.a.*)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$0
- Ongoing fees
-
$0.00
- Discharge fee
-
$300.00
- Package
-
- Maximum loan to value ratio
- 60.00%
- Minimum borrowing amount
- $50,000
- Maximum borrowing amount
- $15,000,000
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Minimum redraw amount
- $0.00
- Offset account
- no
- Split account
- yes
- Other restrictions
- Interest only payment option is for a maximum of 5 years.
- Other benefits
- -
- Special offers
- -
Read reviews and learn more about HSBC home loans
-
Budget Home Loan
- LVR <80%
- Owner Occupier
- Principal & Interest
- Interest rate
-
6.04
%
p.a.
Variable
- Comparison rate
-
6.07
%
p.a.
- Initial monthly repayment
-
$3,011
Enjoy a discounted variable home loan from IMB. Get up to $4,000 cashback (T&Cs apply). Life-of-loan discount off IMB’s standard variable interest rate. Unrestricted additional repayments. Free Internet and Mobile Banking redraws (T&Cs apply). No monthly fees to pay. Up to a 30 year loan term. Split loan available. No offset account.
- Interest rate
-
6.04% p.a. (6.07% p.a.*)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$350
- Ongoing fees
-
$0.00
- Discharge fee
-
$350.00
- Package
-
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $10,000
- Maximum borrowing amount
- $5,000,000
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Minimum redraw amount
- $500.00
- Offset account
- no
- Split account
- yes
- Other restrictions
- -
- Other benefits
- The $449 application fee is waived for <80% LVR Owner Occupier Principal and Interest loans.
- Special offers
- $4,000 cashback for loans $750,000 and above with a maximum LVR of 80%, settled within 90 days of application for refinancers or 180 for purchase loans. $3,000 for loans between $500k and $749k, $2,000 for loans between $250k and $499k.
Read reviews and learn more about IMB Bank home loans
Go to site -
Express Home Loan
- Owner Occupier
- Principal & Interest
- LVR <90%
- Interest rate
-
6.09
%
p.a.
Variable
- Comparison rate
-
6.22
%
p.a.
- Initial monthly repayment
-
$3,027
Get online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.
- Interest rate
-
6.09% p.a. (6.22% p.a.*)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$134
- Ongoing fees
-
$10.00 monthly
- Discharge fee
-
$350.00
- Package
-
- Maximum loan to value ratio
- 90.00%
- Minimum borrowing amount
- $5,000
- Maximum borrowing amount
- $10,000,000
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Minimum redraw amount
- $0.00
- Offset account
- yes
- Split account
- no
- Other restrictions
- Electronic Valuation: $134. Full Valuation <$1m: $220 and>$1m: $440. Loan applicable when buying or refinancing an established property in a capital city or major regional centre.
- Other benefits
- -
- Special offers
- -
Read reviews and learn more about Bendigo Bank home loans
Go to site -
Basic Home Loan
- Owner Occupier
- LVR<60%
- Principal & Interest
- Interest rate
-
6.14
%
p.a.
Variable
- Comparison rate
-
6.16
%
p.a.
- Initial monthly repayment
-
$3,043
Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.
- Interest rate
-
6.14% p.a. (6.16% p.a.*)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$350
- Ongoing fees
-
$0.00
- Discharge fee
-
$400.00
- Package
-
- Maximum loan to value ratio
- 60.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
- $10,000,000
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Minimum redraw amount
- -
- Offset account
- no
- Split account
- yes
- Other restrictions
- -
- Other benefits
- -
- Special offers
- -
Read reviews and learn more about Macquarie home loans
Go to site -
Mortgage Simplifier
- LVR<80%
- Owner Occupier
- Principal & Interest
- Interest rate
-
6.14
%
p.a.
Variable
- Comparison rate
-
6.17
%
p.a.
- Initial monthly repayment
-
$3,043
Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.
- Interest rate
-
6.14% p.a. (6.17% p.a.*)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$350
- Ongoing fees
-
$0.00
- Discharge fee
-
$250.00
- Package
-
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
- $2,000,000
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Fortnightly, Monthly
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Minimum redraw amount
- $1.00
- Offset account
- no
- Split account
- yes
- Other restrictions
- -
- Other benefits
- Everyday round up available, a feature that automatically rounds purchases made on INGs Orange Everyday transaction account to the nearest $1 or $5 and transfers the difference against your loan balance.
- Special offers
- -
Read reviews and learn more about ING home loans
-
Offset Home Loan
- Owner Occupier
- LVR<60%
- Principal & Interest
- Interest rate
-
6.14
%
p.a.
Variable
- Comparison rate
-
6.39
%
p.a.
- Initial monthly repayment
-
$3,043
Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
- Interest rate
-
6.14% p.a. (6.39% p.a.*)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$350
- Ongoing fees
-
$248.00 yearly
- Discharge fee
-
$400.00
- Package
-
Package
- Maximum loan to value ratio
- 60.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
- $10,000,000
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Minimum redraw amount
- -
- Offset account
- yes
- Split account
- yes
- Other restrictions
- -
- Other benefits
- Waived annual fee for credit card added to the home loan.
- Special offers
- -
Read reviews and learn more about Macquarie home loans
Go to site -
Elevate
- Owner Occupier
- Principal & Interest
- <80% LVR
- Interest rate
-
6.18
%
p.a.
Variable
- Comparison rate
-
6.18
%
p.a.
- Initial monthly repayment
-
$3,056
Get competitive rates on loan terms of 5 to 30 years with the Aussie Elevate Home Loan. Structure your loan with up to five splits. Make additional repayments (T&Cs apply). Offset accounts available. Unlimited redraw using your online banking account. Choose from weekly, fortnightly or monthly payments For loan amounts from $10,000 to $5 million.
- Interest rate
-
6.18% p.a. (6.18% p.a.*)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$498
- Ongoing fees
-
$0.00
- Discharge fee
-
$325.00
- Package
-
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $10,000
- Maximum borrowing amount
- $5,000,000
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Minimum redraw amount
- -
- Offset account
- Optional extra - $10 per month
- Split account
- yes
- Other restrictions
- -
- Other benefits
- -
- Special offers
- -
Read reviews and learn more about Aussie home loans
Your selected home loans
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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