News: Mortgage Rates Cut After Historic Cash Rate Change
Banks are slashing mortgage interest rates following the Reserve Bank of Australia’s cash rate cut to 2.25% – the lowest level it has been since the RBA started recording rates in 1990. After 18 months of holding steady, the RBA hopes this drop will be passed on by lenders to save people money on mortgages and other loans.
Smaller banks and credit unions have been the first to take a clear stand, with Bank of Queensland, ME Bank and ING Direct all announcing they would pass on the full 25 basis point cut for home loan customers before any of the Big Four Banks had weighed in.
But the Commonwealth Bank released a statement soon after confirming that it too would pass on the full cut. It has also reduced its three- and five-year fixed rate home loans by 0.25% and 0.3% respectively.
“As the nation’s largest lender, we are always seeking to deliver value to our 1.6 million home loan customers and today we are pleased to pass on the full benefit of the RBA’s recent interest rate reduction,” the Group Executive Retail Banking Services, Matt Comyn, says.
Westpac has gone one step further with its variable home loan rate, reducing it by 0.28% to 5.70% per annum and (a day later) NAB also committed to passing on the full 0.25% cut.
But of the remaining two Big Banks, both ANZ and NAB have kept quiet so far, with ANZ simply stating that it would make a decision by Friday, 6th February. It currently has an interest rate of 5.88% p.a. for its standard variable home loan.
The remaining banks also face increasing pressure to from both customers at the government, with Federal Treasurer Joe Hockey saying banks need to adjust their rates in line with the RBA’s decision.
“This will put an extra $750 a year into the pockets of a typical Australian family with a mortgage of $300,000,” he says in an interview with the ABC.
“We expect this to cut through right across the spectrum of credit.”
Mortgage Rate Cuts
The decision to pass on rate cuts has brought some home loan interest rates to their lowest levels since 2009, according to CommBank data. The Big Bank also says that the changes to its fixed rates are “the lowest we have ever offered”.
The table below outlines the banks that have committed to passing on the rate cut for Variable Home Loans at the time of publication.
|Bank||Rate cut?||% change||New rate||Effective|
|Bank of Queensland||Yes||0.25%||5.76% p.a.||24th February|
|Bankwest||Yes||0.25%||5.64% p.a.||24th February|
|CBA||Yes||0.25%||5.65% p.a.||20th February|
|ING Direct||Yes||0.25%||4.97% p.a.||20th February|
|ME Bank||Yes||0.25%||5.13% p.a.||20th February|
|NAB||Yes||0.25%||5.63% p.a.||20th February|
|St George||Yes||0.25%||5.74% p.a.||20th February|
|Westpac||Yes||0.28%||5.70% p.a.||20th February|
We will update this table with other banks as more information comes in, so keep an eye out if there are still lenders you want to hear from.