Treasurer Josh Frydenberg has blasted all four major banks for failing to pass on the full 25 bps rate cut from the Reserve Bank, saying they have “a lot of explaining to do.”
ANZ and Westpac on Tuesday announced cuts to their mortgage rates in response to the Reserve Bank of Australia’s (RBA) decision to cut the cash rate to 0.75 per cent.
ANZ has reduced its variable rates by between 14 bps and 25 bps, effective from 11 October.
ANZ’s standard variable rates (SVRs) for borrowers with principal and interest (P&I) terms will drop by 14 bps to 4.79 per cent for owner-occupiers.
SVRs for investors with interest-only (IO) terms will be cut by 25 bps to 5.74 per cent.
The bank also announced that it will cut two and three-year fixed rates (Breakfree Package) to 2.98 per cent for owner-occupier P&I borrowers and to 3.49 per cent for investor IO borrowers.
Following the announcement, ANZ group executive, Australia retail & commercial, Mark Hand said: “This was a considered decision balancing the needs of our customers in a low rate environment as well the performance of our business and our role in stimulating the economy.
“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 per cent and 0.25 per cent this time around.
“While we recognise many customers will use this as an opportunity to pay down their existing home loans faster, we hope this provides the economic stimulus the Reserve Bank is wanting to generate.”
Meanwhile, Westpac has reduced its rates by 15 bps, with the changes to apply from 16 October across all of its owner-occupied and investment products for borrowers with both P&I and IO repayment terms.
Westpac’s SVRs for borrowers with P&I terms will fall to 4.83 per cent for owner-occupiers and 5.38 per cent for investors.
SVRs for borrowers with IO terms will fall to 5.42 per cent for owner-occupiers and 5.64 per cent for investors.
“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,” David Lindberg, Westpac chief executive, consumer, said.
All four major banks have now dropped their rates following the RBA’s announcement, with the Commonwealth Bank of Australia and NAB cutting rates by between 13-25 bps and 15-30 bps, respectively.
Treasurer blasts big four
Commonwealth Treasurer Josh Frydenberg has criticised the big four for failing to pass on the full 25 bps reduction to their mortgage customers.
“The banks have a lot of explaining to do,” Mr Frydenberg said.
“This is very disappointing by the banks, and customers should vote with their feet.”
The Treasurer encouraged borrowers to consider switching to alternative lenders with lower mortgage rates.
“Now, some of the smaller lenders have actually passed on this rate cut in [full],” he said.
“People should shop around, get the best deal, but also make their displeasure known to their banks because the rate cuts should be passed on in full, and that would be a good thing for consumers."
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