ING, BOQ and Virgin Money join the rate cut party

The RBA cut official interest rates on Tuesday, prompting several banks to take the axe to their range of variable home loan interest rates.

While lenders are able to make changes at their own discretion, there was plenty of pressure to pass on the full cut to customers, particularly from RBA Governor Philip Lowe.

Following the RBA’s announcement, the usually measured Lowe called for no half measures.

“My usual practice in answering this question has been to explain that there are a range of other factors that influence mortgage pricing, and then say ‘it all depends,’” he said.

“Today, though, I would like to break with my usual practice and provide a clearer answer. And that is: Yes, this reduction in the cash rate should be fully passed through to variable mortgage rates.”

BOQ and Virgin Money among the latest to cut

While there have been a few holdouts, most notably ANZ and Westpac, several banks and lenders have followed through and passed on the full 0.25% to their customers.

Bank of Queensland was among the latest to do so, citing easing funding costs, the broader economy, and customer expectations as key reasons for the decision.

“We believe the responsible decision at this moment in time is to get behind our home lending customers and ensure they enjoy the benefits of reduced cost of funds,” said Lyn McGrath, Group Executive of Retail Banking at BOQ.

The reductions will apply to all BOQ variable home loan interest rates, save for those linked to the Clear Path Owner Occupier (principal and interest), which will only be reduced by 0.15% p.a. The changes will come into effect 25 June.

Virgin Money, part of the BOQ Group, announced it would also be cutting interest rates, but just short of the full 0.25%. As of June 25, all Virgin Money variable home loans for existing Owner Occupiers and Investors will be reduced by 0.22%.

ING customers can also expect to benefit

ING has also decided to pass on the full rate cut, hardly a week after cutting headline rates for its Orange Advantage Loan and Mortgage Simplifier by 0.17%.

As of 25 June, all ING variable rate home loans for both new and existing customers will be reduced by 0.25% p.a.

When the new rate comes into effect, Owner Occupiers paying principal and interest on an ING Mortgage Simplifier home loan will see some sizeable reductions in their monthly repayments.

On a $400,000 loan over 30 years (LVR <80%), rates as low as 3.38% p.a. (3.41% p.a. comparison rate*) will save borrowers $56 a month, or $672 over a year.

If you want to keep track of which banks have passed on the full cut and which haven’t, be sure to check in with our Naughty or Nice table. And for a look at some quality variable rates, check out the examples below or head over to our variable rate home loan comparison page.