Take Your Business Elsewhere: RBA

Posted on 5/06/2019  
Take Your Business Elsewhere: RBA

Reserve Bank governor Philip Lowe (pictured) has urged customers of ANZ and Westpac to take their business elsewhere because of their failure to pass on the RBA rate cut in full.

Federal Treasurer Josh Frydenburg has also criticised those banks who reduced their mortgage rates by less than the 0.25% RBA reduction this week.

But award-winning mortgage broker Louise Lucas says these banks were already offering lower rates than competitors like NAB and Commonwealth Bank.

Lucas, of the Property Education Company, says: “It’s a great big furphy. ANZ and Westpac have been buying business with much lower offers than the advertised rates. They have been much lower than Commonwealth Bank for months. But they bring is on themselves by the way the way they publish their interest rates.

“People should consult an expert because the standard variable rate that is advertised bears no comparison to the actual rate that borrowers are paying. We do a comparison across the major lenders every single day to find out what’s out there.”

Lowe demanded that banks pass on the full cut in the off­icial interest rate to help drive economic growth, after two of the nation’s biggest lenders ignited customer anger by pocketing part of the savings.

The RBA board cut the cash rate for the first time in almost three years on Tuesday, taking the official rate to a record low of 1.25%.

Josh Frydenberg lashed the ANZ after it said it would cut variable mortgage rates by just 18 basis points. Westpac later announced it would cut its standard rate by only 20 basis points.

National Australia Bank and Commonwealth passed on the RBA’s cut in full — saving the average borrower $62 a month, or $744 a year, on the average $400,000 mortgage.

“ANZ has a lot of explaining to do to their customers,” the Treasurer said.

The bank’s action, he said, was “deeply disappointing”, given royal commissioner Ken Hayne had accused the banks only a few months ago of “putting profits before people”.

“Actions like this don’t give the Australian people any comfort that the banks have changed their behaviour,” Frydenberg said.

Lowe said he was disappointed some banks had not passed the RBA’s rate cut on to consumers in full, saying their funding costs had slipped back to 2017 levels. Banks last year raised mortgage rates by an average 15 basis points.

Breaking with the RBA’s practice of leaving markets to respond to official rate movements, Dr Lowe said: “This reduction in the cash rate should be fully passed through to variable mortgage rates. Full pass-through would also mean that the economy receives the full benefit of today’s policy decision.”

He called on customers to shop around, saying: “If your bank has not passed it through, I encourage you to go and look for a better deal somewhere else.”

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