In a scathing doorstep speech given earlier this week, Treasurer Josh Frydenberg slammed the banks who failed to pass the RBA rate cut through to their customers in its entirety, specifically calling out the majors for prioritising their margins over their customers.
While a smattering of smaller lenders passed October’s rate cut through in full, the big four did not.
“Australian consumers expect their banks to do the right thing. Australian consumers need their banks to do the right thing,” said Frydenberg.
“It’s deeply disappointing that the banks have not passed on in full the latest rate cut. Indeed, they ignore the advice of the independent Reserve Bank of Australia and thumbed their noses at Australian consumers.
“Banks should never be increasing their profits at the expense of their customers and, by not passing on these rate cuts in full, that is effectively what is happening.”
Frydenberg noted the funding costs for the banks have come down substantially, leading RBA Governor Philip Lowe to voice a clear expectation the banks could and should pass the rate reduction through to their customers.
While the three recent rate cuts in June, July and October have totaled 75 basis points (bps), the banks have passed through just 57bps. For a $400,000 mortgage, this equates to around $1,500 a year in savings on lower interest payments.
“But we need the banks to do more,” said Frydenberg.
“The best way for the banks to get the message is for customers - for Australian families, for Australian businesses - to seek the best possible deal and if they don’t get it from their existing credit provider, then to go elsewhere.”
The Treasurer added that the passage of the Consumer Data Right will “make that ability to go and seek the best possible deal that much more easier.”