New research shows the majors have ‘charged’ their borrowers an extra $18bn by not passing on the RBA’s rate cuts to standard variables over the past five years.
Comparison site RateCity.com.au claims the gap between the cash rate and the benchmark standard variable rate – the average between the four majors – had doubled since 2007.
The benchmark standard variable rate was 182 basis points above the cash rate in October 2007, and has gradually increased to a current level of 337 basis points, a difference of 155 basis points.
The result means that on a typical $300,000 mortgage, borrowers have paid an extra $11,687 over the past five years.
However, a RateCity spokesperson acknowledged higher funding costs, and the pressure to maintain profits was at the heart of the majors’ decisions not to pass on full cuts.
“There’s no point complaining about paying higher than necessary home loan charges because it won’t stop lenders holding back on rate movements,” said the spokesperson.
Last month, ING
Direct’s executive director distribution, Lisa Claes, told Australian Broker Online
a bank’s balance sheet was also a contributing factor.
“I can say that the funding mix today is influenced by a variety of factors beyond the RBA
cash rate. The other factors include the structure of a bank’s balance sheet,” she said.