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Two second tier lenders have taken the lead position on rates, piling pressure on the majors to follow suit and pass on the full 25 basis point cut delivered by the RBA yesterday.
ME Bank and Bank of Queensland moved quickly on rates, passing on the full RBA rate cut to their respective borrowers.
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"As part of our commitment to looking after customers over the long term and offering a fairer banking alternative, ME Bank has decided to pass on the full 0.25 per cent p.a. reduction to our customers," ME Bank's chief executive Jamie McPhee said.
The decision to pass on the whole rate reduction will place intense pressure on the majors, challenging them to step up to the plate and offer their customers the entire 0.25 per cent reduction.
In the weeks leading up to yesterday's RBA decision there has been widespread speculation that the majors may opt not to pass on any or just part of any reduction to the official cash rate.
In November all four majors moved on rates within 24 hours of the RBA's rate announcement however this month the silence from the big banks is deafening.
National Australia Bank was the only major not to pass on the full rate cut in November and the indications are that the big banks are eying further opportunity to mitigate rising funding costs in December.
But in an industry that is gripped by a fierce price war, ME Bank and BoQ's early rate move has made the major’s decision a lot harder.
Treasurer Wayne Swan is putting further pressure on the majors, yesterday stating that there is no "justification for the banks not to pass on the rate cut".
"Families and small businesses will be very angry if there is not a full pass through of this rate cut," he said.
