Will Australian banks pass on the full RBA rate cut?
Article by Rebeccah Elley
The Reserve Bank of Australia slashed the official cash rate from 2.5% to 2.25%, at yesterday’s February Board meeting. So now all eyes are watching closely to see if the first RBA announcement of 2015 will prompt providers to drop their home loan interest rates by 25 basis point.
<<Update>> The RBA has slashed the cash rate to 2% at the May board meeting. See which lenders have passed on the full rate cut this month in our naughty or nice table.
Smaller lenders ME Bank, ING Direct, Bank of Queensland, Maitland Mutual and Newcastle Permanent have been the first to pass on the better home loan deal to customers.
The Commonwealth Bank was the first of the Big Four to pass on the RBA rate cut, reducing its Standard Variable Rate from 5.90% to 5.65% (effective 20 February). Followed closely by Westpac, reducing its home loan Standard Variable Interest Rate by 0.28% to 5.70% - the first lender to pass on more than 25 basis points.
Update: The Bank of Melbourne has reduced its standard variable home loan rate from 5.90% to 5.65% and St.George Bank will cut its standard variable home loan rate from 5.99% to 5.74%, both effective from 20 February.
Mozo will be watching carefully to see if NAB and ANZ follow suit and pass on the full 25 basis point rate cut to customers. Find out if your bank has been naughty or nice here.
ME Bank plans to drop its Standard Variable Home Loan from 5.38% down to 5.13% and ING Direct will lower the rate on its Mortgage Simplifier from 5.22% to 4.97%. Both new rates will be effective on February 20.
The Bank of Queensland will also pass on the full rate cut on its Standard Variable Rate from 6.01% to 5.76%, which will come into effect on February 24.
BOQ managing director Jon Sutton said this latest rate cut should see a number of variable home loan products drop below 5%, which is great for home owners. “This latest cut brings our Clear Path variable home loan product to a very sharp 4.62%.”
Sutton also said he hoped the rate cut would assist BOQ’s business loan customers.
“Small businesses and service are the engine room for Australia’s growth and this latest cut should bring welcome relief – not just through cheaper lending but also through demand from customers with a bit more money in their pocket each month,” he said.
Alex Malley, chief executive of CPA Australia reiterated this sentiment stating that the decision by the Reserve Bank of Australia is a positive move for Australian businesses and households.
“Given Australia’s low inflation environment, this interest rate cut will be warmly welcomed by both businesses and families. The dual impact of the lower fuel prices we’re all enjoying and a rate cut will provide the necessary catalyst for businesses to invest and employ more staff."