Derek Rose
(Australian Associated Press)
Bowing to pressure from the government, the “big four” banks have announced they will each pass on the Reserve Bank’s rate cut in full, saving borrowers hundreds of dollars a month.
Westpac was the first out the door to hand the 0.25 per cent rate cut over to customers on Tuesday, followed closely by Commonwealth Bank, NAB and then ANZ.
The 0.25 per cent reduction in rates on means an owner-occupier with a standard variable home loan of $400,000 will save an extra $60 per month, or $720 per year, Westpac said.
Prime Minister Scott Morrison had earlier announced he expected the margin-pressured banks to “do the right thing” by consumers and pass on the expected rate cut in full as the coronavirus weighs on the economy.
The RBA delivered the goods, easing to a new record low 0.5 per cent from 0.75 per cent on Tuesday afternoon in an effort to prop up the economy amid a coronavirus threat.
Westpac said its decision reflected expectations that COVID-19 will have a direct impact on our nation’s economy.
“We want to provide additional support to our small business and home loan customers at this unprecedented time,” Westpac consumer CEO David Lindberg said.
Commonwealth Bank said it would also pass along the rate cut in full.
“In responding to this latest official interest rate cut we have examined the important role we play in supporting the Australian economy and the unique set of circumstances facing the country,” CBA retail banking chief Angus Sullivan said.
He said that CBA’s standard variable rate would become one of the lowest on record, and that the bank would keep reviewing its pricing to make sure it was sustainable for the long term.
CBA said for owner-occupiers with principal and interest home loans, the interest rate would drop on March 24 to 4.55 per cent.
Westpac said the home loan rate changes would come into effect on March 17, dropping the variable home loan rate for owner-occupiers with principal and interest repayments to 4.58 per cent.
NAB was third to join the party, lowering home loan, small business and business overdraft variable rates by 25bps, effective 13 March.
ANZ announced it will decrease variable interest home loan rates in Australia by between 0.25 per cent to 0.35 per cent per annum across a range of standard variable rate Indices.
“While there were a range of factors considered in making this decision, ANZ is prepared to play its role in supporting both our customers and the broader economy through this period of uncertainty,” ANZ Group Executive Australia Retail and Commercial Mark Hand said.
Other smaller lenders including Athena and neobank 86 400 say they too would pass along the full rate cut.