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Following yesterday’s announcement by the Reserve Bank, the first of Australia’s majors has decided to pass on more than the full rate cut to borrowers.
Less than three hours after the RBA announced its 25 basis points cash rate cut, Westpac slashed 28 basis points from its standard variable rate.
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The move takes Westpac’s SVR to 5.98 per cent and the major’s home loan rates to their lowest level since October 2009.
“After our reduction in our home loan rates in May, I’m delighted we are able to follow up with a further cut today,” Westpac’s general manager of mortgage broker distribution, Tony MacRae, said.
“This will take the total savings on an average Westpac home loan amount to nearly $4,400 a year since rates started coming down.”
Despite Westpac’s 28 basis point cut, National Australia Bank continues to boast the lowest standard variable rate of all the majors.
NAB was the first of the majors to move on rates, trimming 25 basis points from its SVR just two minutes after the RBA board’s announcement.
The cut took NAB’s SVR to 5.88 per cent.
The Commonwealth Bank of Australia was not far behind, cutting 25 basis points from its standard variable rate within an hour of the announcement.
As a result of CBA’s rate cut, the lender now boasts an SVR of 5.90 per cent.
At press time, ANZ was the only major not to have moved on rates.
The news that three of Australia’s majors have already passed on the rate cut in full will no doubt make the Housing Industry of Association happy.
Yesterday, the HIA urged the banks to pass on any cut in full.
“It is crucial that banks pass this rate cut on in full to mortgage borrowers and small business loans. On most occasions in recent years, banks have pocketed part of the interest rate cuts rather than allowing their customers to receive the full benefit,” HIA’s senior economist Shane Garrett said.
“The RBA has reduced rates by 225 basis points since November 2011 and it is important to stress the benefits that have resulted.
“Lower interest rates have helped to support a modest though hesitant recovery in residential construction activity. There have also been significant cash savings for borrowers with variable rate loans. On a $500,000 mortgage with a 30-year term, the monthly repayments have fallen from $3,300 in January 2011 to $2,679 today. Had the banks passed on the rate cuts in full, the fall in repayments would have been even larger.”
