Big banks quick to drop home loan rates, but 3 fail to pass on full RBA cut

Tom Watson

03 Jul 2019

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All four major Australian banks - ANZ, Commonwealth Bank, NAB and Westpac - have made cuts to their respective variable rate home loans following the Reserve Bank Board’s interest rate decision yesterday afternoon.

In a largely anticipated move, the RBA lowered the official cash rate by 25 basis points from 1.25% to 1.00% - an historically low level in Australia. 

And the big banks weren’t slow to hang around, with ANZ announcing its decision to pass on the full 25 basis point cut to owner occupier and investor customers just hours after the RBA’s decision.       

ANZ was widely criticised for failing to pass on the full rate cut to its customers after the June RBA rate cut, but it proved to be the only major bank to do so this time round, with it’s Standard Variable Rate for owner occupiers to drop from 5.18% p.a. (5.28% p.a. comparison rate*) to 4.93% p.a. (5.03% p.a. comparison rate*) as of July 12. 

“Today we have decided we will reduce variable interest rates for our home loan customers by 0.25% p.a. Importantly, we will apply this reduction across all our variable rate home loans,” said ANZ Group Executive, Australia Retail & Commercial, Mark Hand in a statement yesterday. 

“On balance, we believe this is the right decision for our home loan customers and for our business.” 

The Commonwealth Bank was also quick to jump on the rate cut bandwagon, but their customers might be less impressed as the bank failed to pass on the full 25 basis point cut across all of their variable rate offers. 

Instead, the bank will reduce their Standard Variable Rate home loan for owner occupiers by 0.19% from 5.12% p.a. (5.27% p.a. comparison rate*) to 4.93% p.a. (5.08% p.a. comparison rate*) as of July 23.

NAB also announced a 0.19% cut to its owner occupier and investor variable rate home loans, with it’s Tailored Home Loan for owner occupiers set to drop from 5.11% p.a. (5.24% p.a. comparison rate*) to 4.92% p.a. (5.05% p.a. comparison rate*) from July 12.   

Last of the big four to make a move last night was Westpac, with the bank announcing a 0.20% cut on variable home loan rates for owner occupiers meaning that its Rocket Repay Home Loan will drop from 5.18% p.a. (5.32% p.a. comparison rate*) to 4.98% p.a. (5.12% p.a. comparison rate*) from July 16.  

The decision from Westpac means that it was the only major bank not to pass on a full 25 basis point cut to its customers following either the RBA’s June or July interest rate drops. 

Failure to pass on full cut nets big banks billions 

So how much do the big banks pocket by failing to pass on the RBA’s full 25 point cuts? 

According to Mozo research, since 2016 the four major banks have made an astonishing $125 million per month (approximately) in additional revenue or $3.86 billion in total by failing to pass cuts on in full. 

Furthermore, the delay on actually passing on the cuts to their customers has netted the banks an additional $221 million since August 2016. 

“When you consider that last month ANZ and Westpac pocketed a $193 million annual windfall by holding back some of the official rate cut, it’s not surprising that three of the major banks found it too hard of an opportunity to pass up yesterday,” said Mozo Director, Kirsty Lamont.

RELATED: The best home loans in Australia for 2019

Several lenders, including Athena and Homestar have already moved to pass on the full 25 basis point cut to their customers following yesterday’s RBA decision, and if the response to the RBA’s June decision is anything to go by, there will be more to come in the coming days. 

Following the June RBA cut, Mozo recorded that 47 home loan lenders passed on the full 25 basis point rate cut, 32 passed on part of the cut while seven are yet to move significantly. 

Ready to take advantage of the latest rate cut to switch to a better offer? Start your search by checking out some of the hot offers in the table below, or compare even more great deals by heading over to the Mozo home loan comparison hub.

Compare home loans 2019

Rates updated daily. Advertiser disclosure.

  • loans.com.au

    2.48% p.a.

    2.50% p.a.

    $1234

    Product details Close details
    Smart Home Loan 80

    A low-rate home loan that could save you thousands, with no ongoing fees plus unlimited extra repayments and free redraws. Mozo Experts Choice Low Cost Home Loan 2020.^ You'll need to be borrowing $1 million or less and have at least a 20% deposit required.

    • 2.48% p.a.

    • 2.50% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • Optional - with 0.10% additional interest

    • 80.00%

    • $520

    • $50,000

    • $1,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Smart Home Loan 80

  • HSBC

    2.59% p.a.

    2.60% p.a.

    $1234

    Product details Close details
    Home Value Loan

    No ongoing fees. Free extra repayments and online redraw. Mozo Experts Choice Split Home Loan 2020^

    • 2.59% p.a.

    • 2.60% p.a.

    • $150

    • $0.00

    • $300.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $150

    • $50,000

    • $7,500,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

  • Athena

    2.34% p.a.

    2.34% p.a.

    $1234

    Product details Close details
    Celebrate Variable Home Loan

    Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^

    • 2.34% p.a.

    • 2.34% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 60.00%

    • $0

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Celebrate Variable Home Loan

  • UBank

    2.49% p.a.

    2.49% p.a.

    $1234

    Product details Close details
    UHomeLoan - Discount Offer

    Enjoy a super low rate, $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Free redraw with flexible repayments. Min 20% deposit.

    • 2.49% p.a.

    • 2.49% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $0

    • $100,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the UHomeLoan - Discount Offer

  • Suncorp

    2.68% p.a.

    2.69% p.a.

    $1234

    Product details Close details
    Back to Basics Special

    No monthly account keeping fee, no ongoing annual fee and no loan establishment fee on new lending of $150,000 or more. Get a $2,000 cash bonus when you refinance with an eligible Suncorp Bank Home Loan of $250k+. T&Cs & eligibility criteria apply.

    • 2.68% p.a.

    • 2.69% p.a.

    • $0

    • $0.00

    • $350.00

    • Yes - free

    • yes - free

    • no

    • 80.00%

    • $0

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Refinance from another lender to receive a $2,000 cash bonus for loans of at least $250,000 or $3,000 bonus for loans over $750,000. Available for loans with an LVR <90% and applications made by 18 December 2020 and settled by 26 March 2021.

    Read our Mozo Review to learn more about the Back to Basics Special

^See information about the Mozo Experts Choice Home loans Awards