Big banks pocket an extra $109 million by delaying home loan rate cuts
Since the RBA cut official interest rates last Tuesday, we’ve recorded home loan rate cuts from 33 lenders, 21 of which have passed on the full 0.25% cut to their customers.
Of this group, only four have passed it on to home loan customers without delay, while the rest are waiting an average of 18 days. And if we hone in on just the big banks, we’ll find they’re not particularly keen to pass savings along to customers. Commonwealth Bank, NAB, Westpac and ANZ are waiting an average of two weeks to implement the cuts.
This continues a trend we’ve seen over the years, in which the Big 4 will push out rate cuts at a much slower pace than rate increases (10 days compared to 4), allowing them to pocket millions in the interim.
Big banks hold back in more ways than one
“Collectively, by holding back interest rate relief for their customers these big banks are set to pocket $193 million in extra interest over the next 12 months,” says Mozo Director Kirsty Lamont.
But we shouldn’t let the other two big banks off the hook either. Despite passing on the cut in full, Commonwealth Bank and NAB will make customers wait upwards of a week before they receive any interest rate relief.
These delays, according to Mozo data, will allow the major banks to collect a cool $109 million in combined interest from their home loan customers.
CommBank delays cuts by almost three weeks
Among the big banks, Commonwealth Bank was the worst offender, opting to delay the date at which the cuts will take effect by 20 days.
“Interestingly, when rates last went up in November 2010, CBA pushed through the hike in just two days,” said Lamont.
“At the time CBA inflicted the interest rate pain on its customers 10 days faster than the other Big 4 banks, now when it comes to ease the repayment burden it is seven days slower.”
Where do you look for a better home loan?
If you’re feeling a bit disillusioned with the major banks, you’ll be glad to hear there are plenty of challenger lenders who’ve made a point to not only pass on the full cut, but do so immediately.
Already such lenders have seen an uptick in demand as more and more Australians are turning their backs on the major banks. For an idea of the types of rates on offer, check out the examples we’ve compiled below, or head to our variable home loan comparison page for a more in-depth look.