Adelaide Bank has dropped its variable rate home loan by 10bps following the Reserve Bank’s cash rate cut and a review of its funding costs.
General manager of Adelaide Bank, Damien Percy, said the mortgage rate cut strikes a fair balance for all stakeholders, with the changes made to loans and deposits aiming to deliver a neutral impact on the bank’s margin.
“This reduction in mortgage rates aims to find a fair balance for all of our key stakeholders. The fact is, with interest rates at record low levels, banks are now unable to reduce all deposit product rates. Many depositors are already receiving zero or very low rates of interest and it is simply not possible – or, in many, cases fair – to reduce their rates further,” Percy said.
“When setting interest rates we need to consider many factors and carefully take into account the needs of our stakeholders, including borrowers and depositors, shareholders, staff, partners, and the broader community.
“Interest rates are now at a 50 year low, with customers receiving at least a 1.5% reduction in the residential variable mortgage rate over the past four years. While the reduction in mortgage rates is great news for home owners paying down debt, there are a significant number of people who rely on income from their deposits, and we recognise they will continue to be challenged by this decrease.”