“I’m sure there’s an element of proof in [Fraser’s comments] – but the RBA
base interest rates on what borrowers actually pay and had banks actually passed on the cuts in full, they wouldn’t have dropped it.”
Van Onselen argues that the RBA doesn’t set the rate independently and agrees with earlier comments made by current governor Glenn Stevens.
“The RBA wouldn’t have lowered the cash rate as much had major lenders passed the interest rate cuts on in full. Glenn Stevens have been explicit on that point – we sent the cash rate at what borrowers actually pay.”
Bank home loan customers have received an average rate cut of 0.93 percentage points in the past year, while the RBA made a 1.25 percentage-point cut in the cash rate in the same time frame.
Fraser describes bank profits as ‘very, very healthy’ and questions how competitive the market is.