Westpac and ANZ have joined their big four counterparts in declining to pass the Reserve Bank’s (RBA) rate cut through to customers in full.
Like CBA and NAB, Westpac and ANZ will pass on only part of the 25bps reduction.
Yesterday, Westpac announced it will decrease its variable home loan interest rates by 0.15%, while ANZ said it’s cutting its rates by just 0.14%.
David Lindberg, Westpac chief executive of consumer, highlighted that the bank’s new Standard Variable Rate (SVR) is the lowest on record for owner occupiers paying P&I.
“In making the decision, we took into account the reduction of the official cash rate and the commercial pressures of the low interest rate environment,” he said.
ANZ group executive for Australia retail and commercial, Mark Hand, also emphasised that the bank’s reduction has resulted in “the lowest residential rate on record for ANZ.” However, he alluded to the frustration customers may feel given the failure to pass through the full 25bps.
“This was a considered decision balancing the needs of our customers in a low rate environment as well as the performance of our business and our role in stimulating the economy,” he said.
“We were able to match the full rate reduction in July and the majority in June, however the dynamics of record low interest rates has resulted in a reduction in variable home lending rates of between 0.14% and 0.25% this time around.”
“We hope this provides the economic stimulus the Reserve Bank is wanting to generate.”
CBA and NAB both responded with their rate reduction announcements following the RBA’s cut on Tuesday, opting to lower their rates by 0.13% and 0.15% respectively.
Many, including Treasurer Josh Frydenberg, remain skeptical of the appropriateness of Australia’s largest players failing to pass through the entire 25bps cut.
“Owner occupiers paying principal and interest on variable rate home loans is the number one market for most banks and home lenders,” said Vadim Taube, CEO of financial comparison site InfoChoice.
“If your lender hasn’t passed on the full RBA rate cut to you, you may like to listen to Treasurer Josh Frydenberg and think about voting with your feet.
“There are plenty of lenders who are passing on the full rate cut to customers and switching loans is getting easier and cheaper all the time.”