How the banks have responded to the interest rate cut
How have lenders responded to the May RBA rate cut?
|Lender||Rate cut||Effective date|
|ANZ||-0.25%||Friday 8 May|
|bankmecu||-0.25%||Friday 15 May|
|CBA||-0.20%||Wednesday 13 May|
|Greater Building Society||-0.25%||Friday 15 May|
|ING DIRECT||-0.25%||Friday 15 May|
|Loans.com.au||-0.25%||Tuesday 5 May|
|ME Bank||-0.25%||Friday 22 May|
|NAB||-0.20%||Wednesday 13 May|
|The Mutual||-0.25%||Monday 18 May|
AN INVESTIGATION by one of Australia's biggest comparison websites has found Australia's big banks are quicker to pass on rate hikes compared to rate cuts.
The research by finder.com.au compared the number of days it took ANZ, Commonwealth Bank, National Australia Bank and Westpac to pass on the Reserve Bank's rate movements since October 2009.
It found the big four banks took an average of six days to increase their variable home loan interest rates for the past seven cash rate hikes between October 2009 and November 2010. However, the past nine cash rate cuts from November 2011 to February 2015 saw the major four banks take an average 11 days to pass them on - almost double the time for rate hikes.
According to the website, the big four banks collectively earn almost $4 million every day that they don't pass on the rate cut to their variable rate home loan customers.
Michelle Hutchison, money expert at finder.com.au, said the big four banks show a bad example to the rest of the home loan market.
"Despite the fact that they have not passed on all of the full cuts since the Reserve Bank began dropping the cash rate in November 2011, they have taken longer to pass on rate cuts compared to increasing their rates," Ms Hutchison said.
"The big four banks hold almost the entire home loan market share, which is over 80% of all banks, so they set the benchmark for interest rate decisions.
"If they aren't playing fair then it sets a precedent to other lenders and the entire financial services industry that this is ok, when it shouldn't be."
Following the latest Reserve Bank cash rate cut yesterday, six lenders have so far announced interest rate cuts to their variable rate home loans.
Out of the big four banks, ANZ will be passing on the full cut while Commonwealth Bank will be passing on 0.20 of the 0.25 percentage points. Other providers that have already announce rate cuts include ING Direct, loans.com.au, ME Bank and The Mutual.