 Will all lenders pass on the full rate cut?
Treasurer Wayne Swan has made a bold statement, urging banks to pass on the full rate cut to home owners as soon as possible. On Tuesday, the Reserve Bank of Australia moved to cut official interest rates by 100 basis points.
So far, only the Commonwealth Bank and National Australia Bank has passed on the full reductions. ANZ, Bendigo Bank, Westpac, BankWest and non-bank lender Aussie Home Loans will pass on reductions of between 80 and 85 basis points.
“This
is a vital rate cut ... delivered at a time when all our joint efforts
are directed towards strengthening the economy and protecting
Australian jobs,” Mr Swan said.
“For these reasons the government does expect the banks to pass this on in full.”
The RBA also said it a statement they expected banks to pass on the majority of today's big rate cut. RBA governor Glenn Stevens said the trends in money market yields mean that banks will have lower lending costs, so should pass on the full rate cuts.
Rate cuts since September alone had reduced monthly repayments by about $600 a month on a $300,000 mortgage, Mr Swan said.
The December rate cuts is the fourth in as many months, as the RBA tries to prevent Australia from joining the US and the UK in a recession. Recently, there have been some aggressive rate cuts designed to boost the economy. In September the RBA cut 25 basis points off the official rate, but
when this did little to influence the economy positively, the rate was
slashed by 100 basis points in October. November saw another cut, this
time of 75 basis points.
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