Commonwealth Treasurer Josh Frydenberg has criticised the big four banks for failing to pass the full 25 bps reduction to consumers following Tuesday’s cash rate cut, despite ANZ and Westpac announcing changes.
Both Westpac and ANZ came out to explain that they would not be passing on the full rate cut to consumers, after a similar decision from CBA and NAB the day previously.
“The banks have a lot of explaining to do,” were the words of Treasurer Josh Frydenberg.
“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."
ANZ’s variable rate customers will see a reduction to their mortgage rates between 14 bps and 25 bps depending on their loan product, with new pricing effective from 11 October 2019.
For standard variable rate owner-occupiers paying principal and interest, the index rate will reduce by 14 bps p.a to 4.79 per cent p.a.
For standard variable rate investors paying interest-only, the index rate will reduce by 25 bps p.a to 5.74 per cent p.a.
Two and three year fixed rates for owner-occupiers paying principal and interest will also be reduced, to 2.98 per cent p.a. (with ANZ Breakfree Package).
Two and three year fixed rates for investors paying interest-only will also drop to 3.49 per cent p.a. (with ANZ Breakfree Package).
Commenting on the changes, ANZ’s group executive of Australia retail & commercial, Mark Hand, outlined that “this was a considered decision balancing the needs of our customers in a low rate environment as well as the performance of our business and our role in stimulating the economy”.
“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,” he continued.
Westpac has indicated that it will offer its consumers a discount to their home loan products from Wednesday, 16 October 2019.
Variable home loan (owner-occupier) rates have been reduced by 15 bps p.a. to 4.83 per cent p.a. for customers with principal and interest repayments.
Variable residential investment property loan rate will be reduced by 15 bps p.a. to 5.38 per cent p.a. for customers with principal and interest repayments.
Variable home loan (owner-occupier) rate will be reduced by 15 bps p.a. to 5.42 per cent p.a. for customers with interest-only repayments.
The variable residential investment property loan rate will be reduced by 15 bps p.a. to 5.64 per cent p.a. for customers with interest-only repayments.
Westpac’s chief executive, consumer, David Lindberg, said the reduction will help consumers wanting to get ahead on their loan, as well as help new home buyers looking to purchase a property.
“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,” he outlined.
“For an owner-occupier customer with a standard variable home loan of $400,000 on principal and interest repayments, this reduction could result in a saving of $36 per month, or $432 each year.”