Interest Rate Cuts Begin

Posted on October 9th, 2012 · Posted in News

The Commonwealth Bank, Westpac and NAB have all announced cuts in the wake of the Reserve Bank’s cash rate reduction, but none of these lenders have passed on the full 25bp drop.

NAB moved first on rates, passing along 20 of the 25bp cut. The reduction brings the major’s standard variable rate to 6.58%.

Commonwealth Bank followed suit, also cutting 20bps from its standard variable rate, dropping the rate to 6.6%. The bank pointed to shareholder and depositor interests in defence of its partial pass-on.

Westpac cut its standard variable by 18 basis points, bringing it to 6.71%.  “In coming to this decision we have sought to balance the needs of our mortgage customers with those of our millions of savers, particularly retirees who depend on the income from their deposit accounts,” said Westpac’s group executive retail and business banking, Jason Yetton.

ING Direct, Australia’s 5th largest home lender, has announced it will pass on the Reserve Bank of Australia’s (RBA) interest rate cut in full, slicing its variable home loans by 0.25bp.

ANZ has given little hope of a full reduction to its mortgage customers. ANZ Australia boss Philip Chronican told reporters all would be revealed when the bank holds its regular rates meeting on October 12. But he gave his customers little reason to expect their mortgage repayments to fall by a quarter of a per cent, saying the RBA’s cash rate has no effect on ANZ’s funding costs. “Our cost of funds doesn’t change on the first Tuesday of the month when the Reserve Bank moves its cash rate, we fund ourselves through a range of term deposits or even wholesale funds,” Mr Chronican told reporters. “We’re trying to create a gap between the Reserve Bank’s move.”

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