Big banks to feel the pressure with forecasted RBA rate cut
As anticipation continues to grow amongst Aussies awaiting the RBA announcement, speculations of a Melbourne Cup day rate cut are in the air.
According to new Mozo research, should the RBA cut rates on Tuesday it’ll be the big banks who will feel the heat.
Mozo found that the Big Four banks’ tactic of ‘slow and steady’ to pass on interest rate cuts in the past has seen them rake in big bucks. In fact, by delaying the effective dates the big banks profited $109 million this year alone.
That figure then jumps to a staggering $1.2 billion if you consider when the RBA began cutting rates in 2011.
“With so many mortgage customers under pressure, if we see another cut to official interest rates next week we need the banks to end their longstanding practice of profiteering at their customers’ expense,” said Mozo Director, Kirsty Lamont.
“With the progressive winding back of Jobkeeper and Jobseeker support payments and the banks mortgage holidays coming to an end, it’s critical the banks pass on this latest cut without delay.”
However, these big players weren’t alone in their efforts, as Mozo found that 58 banks delayed the effective dates of their rate cuts after the first official RBA cut for the year in March.
A total of 69 lenders passed on the first rate cut in full back in March, while 12 only chose to pass on a partial cut.
Households set to save should the banks provide rate relief
While there's no way of telling how the RBA will choose to move come Tuesday, many experts are predicting the official cash rate will drop by 15 basis points.
The average variable rate home loan in the Mozo database currently sits at 3.34%, bringing the monthly repayments for owner occupiers paying principal and interest to $1,761.
Should lenders pass on this 15 basis points reduction, the new average variable rate will drop to just 3.19%, saving households $33 a month on their mortgage.
And with budgets getting tighter in many households due to the COVID-19 pandemic, Lamont believes that the possibility for a lender to pass on the cut could be make or break for vulnerable Aussies.
“With a number of the banks already indicating some customers won’t make it through the pandemic, their decision on whether or not to pass the rate cut could quite literally be the difference between keeping a roof over your head or being kicked out in the cold,” she said.
Where to find the best variable rates on the market
The good news is, households looking to save on their home loan don’t have to wait for their lender to pass on a rate cut. We took a peek into the Mozo database to source the top three variable rates offered on the market.
Leading Variable Interest Rates
Lender | Home Loan | Interest Rate |
Well Home Loans | Well Balanced | 2.17% (2.20% comp rate*) |
Reduce Home Loans | Economizer Variable | 2.19% (2.23% comp rate*) |
Tic:Toc | Special Variable Home Loan | 2.19% (2.20% comp rate*) |
Source: mozo.com.au as of 26 October 2020. Based on a $400,000 loan at 80% LVR for an Owner Occupier with Principal & Interest repayments.
You can compare more variable rates by visiting our home loan comparison tool or track any home loan rate movements over at our Reserve Bank interest rates page.
Compare variable home loans - last updated January 23, 2021
Smart Booster Home Loan
1 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR
variable rate
comparison rate
Initial monthly repayment
1.99% p.a.variable for 12 months and then 2.48% p.a.2.47% p.a.CompareCompareSmart Booster Home Loan
A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required.
- variable rate
- 1.99% p.a.variable for 12 months and then 2.48% p.a.
- comparison rate
- 2.47% p.a.
- Upfront fees
- $520
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- Optional - with 0.10% additional interest
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $1,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Smart Booster Home Loan
UHomeLoan - Discount Offer
Owner Occupier, Principal & Interest
variable rate
comparison rate
Initial monthly repayment
2.34% p.a.2.34% p.a.CompareCompareUHomeLoan - 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.
- variable rate
- 2.34% p.a.
- comparison rate
- 2.34% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- -
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the UHomeLoan - Discount Offer
Celebrate Variable Home Loan
<60% LVR, Owner Occupier, Principal & Interest
variable rate
comparison rate
Initial monthly repayment
2.19% p.a.2.19% p.a.CompareCompareCelebrate 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.^
- variable rate
- 2.19% p.a.
- comparison rate
- 2.19% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Celebrate Variable Home Loan
Basic Home Loan
Owner Occupier, LVR<80%, Principal & Interest
variable rate
comparison rate
Initial monthly repayment
2.64% p.a.2.64% p.a.CompareCompareBasic Home Loan
Flexible loan structure – create up to six loan accounts with different rate and repayment types. Free redraw from your loan using Macquarie Online.
- variable rate
- 2.64% p.a.
- comparison rate
- 2.64% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $400.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $749,999
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Basic Home Loan
Back to Basics Special
LVR<80%, Owner Occupier, Principal & Interest
variable rate
comparison rate
Initial monthly repayment
2.54% p.a.2.55% p.a.CompareCompareBack 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.
- variable rate
- 2.54% p.a.
- comparison rate
- 2.55% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $350.00
- Extra repayments
- Yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- -
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Back to Basics Special
^See information about the Mozo Experts Choice Home Loans Awards
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