ANZ and Westpac combined are expected to generate more than $53 million in interest by being the last of the big four to pass on the RBA’s cash rate cut.
Westpac’s 0.20 basis point cut doesn’t come in to effect until December 17 and ANZ won’t announce its new rate until Friday – after which it could take a further seven days for any reduction to actually become available to borrowers.
Economists estimate that each of the big banks stand to earn around $2 million for each day leading up to rate cuts coming into effect.
Westpac alone is set to generate $28 million over the 13 days from last Tuesday leading up to December 17.
CBA and NAB, though much quicker to pass on interest rate reductions to customers, have still generated an estimated $14 million in the six days leading up to yesterday, when their respective .20 basis point cuts reached customers.
In an article published yesterday on Australian Broker Online, Bernie Lewis executive chairman, Mark Lewis, said the amount of interest income generated by the big banks in recent years is impressive.
“In the last five years, home loan borrowers have paid the banks an incredible $18 billion extra in interest on their home loans due to the banks not passing on RBA interest rate cuts in full.”
So far, none of the big banks have opted to pass on the full 0.25 basis point cut to borrowers, though a handful of non-major lenders, including ING and Yellow Brick Road, have done so.