Press Release

For immediate release

Information verified correct on December 8th, 2016

Don’t hold your breath: big banks slower to pass on cash rate cuts

  • finder.com.au Investigation shows big 4 banks take almost double the time to pass on rate cut compared to rate rise
  • Six lenders so far announce rate cuts including ANZ and Commonwealth Bank
  • Borrowers urged to compare home loan providers to avoid delayed rate cuts

May 6, 2014, SYDNEY – A new investigation by one of Australia's biggest comparison websites finder.com.au has found that Australia's big banks are quicker to pass on rate hikes compared to rate cuts.

The research 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 that 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 finder.com.au, 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.

"The big four banks hold almost the entire home loan market share, which is over 80 percent 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 (May 5, 2015), six lenders have so far announced interest rate cuts to their variable rate home loans according to finder.com.au.

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.

"While we can't expect the big banks to pass on cuts as fast as they lift their rates, borrowers stand to make a lot more money by comparing lenders online. There's a huge difference in what lenders are offering so if you're sick of waiting for a rate cut, look elsewhere for a better deal."

finder.com.au will keep a live update of lenders that announce rate changes, their effective dates and rate cuts

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Disclaimer

The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.

About finder.com.au:

finder.com.au is one of Australia’s biggest comparison websites and has helped over 4.8 million Australians find better credit cards, home loans, life insurance, shopping deals and more since 2006. finder.com.au compares 250 credit and debit cards from 31 providers, over 300 home loan products, and information from 13 life insurance providers as well as online shopping promo codes, mobile phone plans, travel insurance and more. One Australian every five minutes is using finder.com.au or creditcardfinder.com.au to find better (Source: Google Analytics).

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