Big bank emergency support: How have CommBank, NAB, Westpac and ANZ responded to the latest RBA cut?

By Niko Iliakis ·

Following the Reserve Bank’s inter-meeting decision to cut the official cash rate this Thursday, Australians have been anxiously waiting for word on how their banks and lenders will respond.

One day out, Commonwealth Bank, NAB, Westpac and ANZ have all made their plans known. Amid fears that the coronavirus outbreak could bring the economy to a standstill, all four have announced they will be delivering much-needed support to customers.

The support packages hope to boost the cash flow of businesses and households, and are the clearest sign yet that the banks recognise the unique risks currently facing the Australian economy.

Commonwealth Bank

  • Option to pause home loan repayments for up to 6 months
  • 0.70% reduction to 1, 2 and 3 year fixed home loan rates
  • 0.60% increase for 12 month term deposits to 1.70% p.a.
  • 1.00% reduction to all existing cash-linked small business loans
  • 1.00% reduction to business loans
  • Multiple fee waivers for business customers
  • Automatic enrolment of 76,000 businesses into loan deferral arrangements for up to 6 months

Not long after the RBA’s announcement, Commonwealth Bank announced a host of changes to products for both businesses and households.

Most notably, the big bank made the surprise decision to cut 1, 2 and 3 year fixed home loan rates by 0.70%, bringing rates across all three terms to 2.29% p.a.

This will apply to new customers and existing variable rate customers if they switch to a fixed rate loan. Anyone currently paying off a fixed rate loan will not see any cuts.

The bank has not announced plans to reduce variable rates.

RELATED: Commbank responds to March emergency RBA cut

Commonwealth Bank CEO, Matt Comyn said the bank’s market position means it is well-placed to extend support to parts of the economy in times of crisis.

“In particular, we want to ensure that we help keep small businesses open so that they can keep Australians employed, and that we do everything we can to support households and older Australians,” he said.

To that end, CommBank will be rolling out a range of measures to help businesses keep their lights on, including a reduction of 1.00% to business loan rates as of April 3. 

CommBank will also lend support to business customers facing financial hardship by allowing for deferred repayments on vehicle and equipment finance loans.

Struggling businesses can also receive waivers on merchant terminal fees, redraw fees, early redraw fees on business term deposit accounts, and establishment fees and excess interest on Temporary Excess products. 

NAB

  • Option to pause home loan repayments for up to 6 months
  • 0.60% reduction to 1, 2 and 3 year fixed home loan rates
  • Introduction of 10-month term deposit offering 1.75% p.a.
  • 1.00% reduction on variable rates for small business loans
  • 2.00% reduction to new loans and all overdrafts on QuickBiz
  • Option to defer business credit card repayments
  • Option to defer business loan repayments for up to 6 months

One day after the RBA’s out-of-cycle decision to lower official interest rates, NAB also announced sweeping changes across its product suite.

Fixed home loan rates will see reductions of 0.60%, effective March 25. Once in place, owner occupiers making principal and interest repayments will be able to access rates as low as 2.39% p.a. for 1 year terms, 2.29% p.a. for 2 and 3 year terms, and 2.79% p.a. for 5 year terms.

According to NAB, variable home loan rates will remain unchanged.

The big bank will also roll out a 10 month term deposit rate of 1.75% p.a. on March 24. It will be accessible to personal customers only, and should offer some relief to savers who have been hurt by plummeting rates.

As for businesses, they’ll receive support in the form of a 1.00% reduction on variable rates for small business loans. NAB’s digital business loan, QuickBiz, will also see a 2.00% reduction on new loans and all overdrafts.

“These measures will provide significant relief to businesses and homebuyers over the next six months as we all deal with this unprecedented situation,” said NAB CEO Ross McEwan.

“Businesses in particular need help and they need it now, so we have come through with a range of measures. This support will provide cash flow relief so they can stay open, and keep people in jobs.”

Westpac

  • Introduction of a 2.29% p.a. fixed rate home loan for 1, 2 and 3 years
  • 3-6 month deferral of mortgage repayments for anyone who has lost their job or suffered loss of income as a result of COVID-19
  • Introduction of 12 month term deposit offering 1.70% p.a.
  • Introduction of 8 month term deposit offering 2.00% p.a. for Australians aged 65 and over
  • 2.00% reduction to overdrafts for new and existing business customers
  • 1.00% reduction to variable interest rates on small business cash-based loans
  • Option to defer business loan repayments for 6 months

Mirroring CommBank’s move, Westpac will also be dropping fixed rates for 1, 2 and 3 year terms to 2.29% p.a. This will come into effect March 27, and will apply to owner occupiers making principal and interest repayments on the Premier Advantage Package.

“This is a once in a lifetime event and a united response by government, regulators and corporate Australia is exactly what we need,” said Westpac Group’s Acting CEO, Peter King.

While the big bank will not be cutting variable rates, it has said it will be offering relief to Australians who have suffered financially as a result of the current crisis. 

Mortgage customers who have lost their jobs or income because of the coronavirus outbreak will be able to apply for a 3 month deferral on their repayments, with an extension of another 3 months available after review.

Savers will also be happy to hear that Westpac will be bumping up term deposit rates. 12 month investment options will now offer rates of 1.70% p.a., while a special 8 month term available to those aged 65 and above will offer 2.00% p.a.

As for business customers, they will be receiving much-needed support in the form of a 2.00% reduction on overdrafts and a 1.00% reduction on small business cash-based loans. Both will come into effect April 6.

What’s more, struggling businesses will be able to defer business credit card payments by up to 3 months, terminate a term deposit without being penalised, access a fee free redraw, and access restructuring and consolidation loans.

ANZ

  • 0.15% reduction to variable home loan rates
  • Introduction of a 2.19% p.a. 2 year fixed rate home loan
  • Option to defer loan repayments for 3-6 months
  • 0.25% reduction to variable interest small business loan rates
  • Option to defer business loan repayments for 6 months
  • Temporary increases in overdraft facilities for 12 months
  • Introduction of 2.59% p.a. fixed rate secured small business loan for 2 and 3 years (up to $1 million)

The last to move was ANZ, but unlike the other three major banks it has made clear its support package will extend to variable rate customers. A 0.15% reduction will be applied to ANZ’s range of variable home loan rates, effective March 27.

It will also bring 2 year fixed rates to 2.19% p.a. — the lowest currently offered by any of the big banks.

ANZ Chief Executive Officer, Shayne Elliott said the decision hoped to ease some of the pressure Aussie households and businesses are currently facing. 

“Our decision to reduce variable home loan and small business rates is the right thing to do for our existing customers, particularly the significant number of our home loan customers who are self-employed and managing the effects of the COVID-19 crisis on their own businesses,” he said.

Business customers will see 0.25% decreases to small business loan variable rates, effective March 27. Fixed rates will also be reduced, with 2 and 3 year options for fixed small business loans (secured) now offering 2.59% p.a.

Further help will be made available to business customers via a 6 month deferral on loan repayments, with interest capitalised. For businesses paying off loans of $1 million, this will free up $40,000 to $50,000 of working capital. 

For more information on what banks are doing to help customers, browse our guide to Aussie banks' coronavirus relief packages. And if you think you could use a break from your repayments, read up on the big banks' mortgage deferral programs.

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