Lender undercuts majors by more than 50bps

by Adam Smith08 May 2012

Another lender has announced rate cuts, pipping the big four by more than 50bps.

ME Bank has cut its variable mortgage rates by 30bps. Though the bank followed the lead of the major banks in not passing on the full 50bps of RBA cuts, its 6.44% variable rate remains 55bps below the lowest of the major banks, NAB.

"Over the last 18 months we have reduced our rates more than the major banks. Between November 2010 and May 2012, the major banks reduced their rates on average by 0.34%p.a. or less, while ME Bank delivered 0.55%p.a. in rate cuts," the bank's CEO, Jamie McPhee, said.

McPhee said the lender had also chosen to hold rates steady during out-of-cycle moves from the majors. McPhee claimed the bank had borne higher funding costs, choosing to withhold a portion of the current rate cut rather than pass on a rate rise to consumers.

"We have been steadfast in keeping the full financial burden of increased funding costs off customers for as long as possible," he said.


  • by A Broker 8/05/2012 9:54:27 AM

    Nice spin on behalf of ME Bank. Give less back to borrowers in terms of rate cut whilst making it look like they've given more. Lovely.

  • by PeterT 8/05/2012 11:03:08 AM

    Pathetic. Almost every other lender has a product available to almost everyone with rates at least 20 points lower than ME.

  • by Damien 8/05/2012 1:09:26 PM

    Put simply this the result of collusion and little to do with the cost of funds, so each RBA cut now just increases the banks bottom line, the banks are laughing all the way to their own banks!

    Why is it that in 99% of businesses, when the cost of funds / goods go up , profit generally declines, but when cost of funds are allegedly going through the roof, the banks profit increases, what an astonishing business model…..

    This is consistent with the general “big business behaviour” in Australia,

    Q- How much does this product cost?

    A- As much as we can gauge out of you before you can’t cope any longer, get ready for a bumpy ride folks !!!