The fact that none of the big banks passed on the full effect of the last RBA rate cut was brought into sharp focus at the Sydney NAB Broker roundtable when its regional general manager, Matt Lawler, told brokers that the bank had been "taking back margin".
Lawler was responding to questions posed by brokers about 'cost of funds' explanation given by banks for not passing on RBA rate cuts.
He tempered his response by saying the bank was not taking back as much as it did in the 1990s when he said margins were as high as 4%.
Prior to making this explanation, Lawler said it was difficult to explain to customers the reasons for why cost of funding was going up: "It's a very difficult message to get across to consumers on Sunrise in three minutes."
He said that while in some areas cost of funding had eased up; average funding costs were still going up - particularly medium term funding.
Furthermore, he said the bank only funded 50% of its mortgage lending from its term deposits.
"If term deposits matched mortgage lending, the RBA cash rate would be the perfect barometer," he said.
NAB was the only one of the big banks not to pass on any of the cut to homeowners
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