The 0.5% club: These 6 home loan lenders passed on the full RBA cut twice

It’s been nine days since the RBA decided to drop the official cash rate to a record low 1.00% and since then a large number of home loan providers have signalled their intention to reduce rates on their respective variable mortgage offers. 

However, unlike the response to the RBA’s June rate cut, many lenders have made the decision not to pass on the 0.25% cut in full.

In fact, at the time of writing, just six home loan providers^ in the Mozo database have dropped, or indicated their intention to drop, their variable rate offers by 0.25% this month - totalling 0.5% since June.

	0.25% cut date	Select Variable Offer	Current Rate
Athena	Already applied	Variable Home Loan	3.09% (3.09% comparison rate*)
Greater Bank	29 July	Great Rate Home Loan	3.57% (3.59% comparison rate*)
Homestar	Already applied	Star Essentials Home Loan	2.99% (2.99% comparison rate*)
Newcastle Permanent	29 July	Real Deal Home Loan	3.49% (3.49% comparison rate*)
RACQ Bank	Already applied	Mortgage Saver Special	3.19% (3.19% comparison rate*)
UBank	2 August	UHomeLoan - Discount Offer	3.34% (3.34% comparison rate*)

First off the block were online lenders Athena and Homestar who both passed on the full 0.25% cut just minutes after the RBA made their announcement. 

Queensland-based lender RACQ Bank has also already made a 25 basis point cut to their variable rate offers, while Greater Bank (29 July), Newcastle Permanent (29 July) and UBank (2 August) will all make adjustments in the coming weeks. 

Of the major banks, ANZ proved the only lender to pass on the full 0.25% cut this month, though this is perhaps unsurprising after they were roundly pilloried for only cutting variable rate home loans by 0.18% following the June RBA decision.   

Meanwhile both the Commonwealth Bank and NAB dropped variable rates by 0.19%, while Westpac chose to reduce its own variable rates by 0.20% - making it the only major bank not to pass on at least one of the rate cuts in full.

	June Rate Cut	July Rate Cut	Total of both cuts
ANZ	0.18%	0.25%	0.43%
Commonwealth Bank	0.25%	0.19%	0.44%
NAB	0.25%	0.19%	0.44%
Westpac	0.20%	0.20%	0.40%

How much could a larger rate cut save mortgage holders? 

So when it comes down to it, just how much valuable would a 0.10% or 0.20% difference in rate reduction be for a borrower?

Let’s use Simon and Elle as an example. The couple have a $400,000 mortgage, an LVR of 80% and are going to be making principal and interest repayments on the loan for the next 25 years. They also had a 4.00% interest rate before the double RBA rate cuts.  

According to the Mozo home loan repayments calculator, if Simon and Elle’s lender dropped their variable home loan rate in line with the RBA’s full 0.50% basis points cut - so a new rate of 3.50% - the couple’s repayments would drop to $2,002 per month.  

However, if their lender decided to hold part of that cut back - passing on 0.40% instead - their new rate would be 3.60% and their monthly repayments would total $2,024 instead.

While that might not seem much, that extra $22 per month actually works out at $6,455 in additional interest over the 25 year loan period. 

RELATED: Back to back cuts: The RBA drops official interest rates to 1.00%