Major banks hold off on full RBA rate cut

While the Reserve Bank of Australia dropped the official cash rate by 25 basis points to a record low 2% at Tuesday’s board meeting, Australia’s biggest banks the Commonwealth Bank, Westpac and NAB have only passed on a portion of the RBA rate cut.

ANZ was the only big four bank to pass on the full 0.25% to its variable home loan customers bringing the rate down to 5.38% starting tomorrow, 8 May.

However, the Commonwealth Bank who is set to earn an annual profit of almost $9 billion, only cut its Standard Variable Rate by 0.20% down to 5.45% (effective 13 May).

NAB also decided to only pass on a 20 basis point reduction from 13 May to home loan customers, bringing its variable rate to 5.43%.

While Westpac passed on a slightly higher rate reduction, it cut short of passing on the full RBA rate cut, instead reducing its standard variable home loans by 0.22% to 5.48%, effective 18 May.

St.George Bank (owned by Westpac) only reduced its standard variable home loan rate by 0.20% to 5.54%, also starting from 18 May 2015.

Treasurer Joe Hockey said in a statement that the interest rate cut is good news for families and small businesses and urged the banks to immediately pass on this rate cut.

As the second rate cut in 2015, Hockey explained that “the combined 50 basis point cut in interest rates will put an extra $1,500 into the pockets of a typical Australian family with a mortgage of $300,000 this year.”

See if your provider has passed on the full RBA rate cut in our naughty or nice table here.