Smaller lenders have been quick to immediately pass on the RBA’s interest rate cut to customers but the big four weren’t so trigger-happy.
Comparison site Canstar has revealed some of the first small lenders to cut their rates were Athena Home Loans (-0.15%), Reduce Home Loans (-0.10 – 0.20%), Homestar Finance (-0.15%), Homeloans.com.au (-0.15%) and Pacific Mortgage Group (-0.10 – 0.16%).
When the big four started to announce their response on Wednesday, it garnered a mixed response.
The Commonwealth Bank, for example, said they would not reduce rates for existing variable rate customers, but cut fixed rates instead.
From the middle of next week, new owner occupiers paying principal and interest will be offered the following fixed rates:
100bps reduction to 1.99% on four-year loans
15bps reduction to 2.14% on two and three-year loans
10bps reduction to 2.19% on one-year home loans
Group executive of retail banking at CBA, Angus Sullivan, spoke to Broker News.
“Tuesday’s move by the RBA will lower the structure of interest rates and provide confidence that Australians can borrow over the long term at historically low rates,” he said.
“We have reflected this in our interest rate settings, offering customers our lowest ever fixed rate – 1.99% fixed for four years – providing customers who fix some or all of their home loan with certainty and confidence into the future.”
Westpac announced a similar move, reducing a range of fixed home loan rates and small business loans.
Westpac’s Richard Burton said he hoped the cuts would help struggling customers.
“However, we are in an extraordinary period with the official cash rate at a historical low and unconventional monetary policy measures in place,” he told Broker News.
“It is critical we carefully manage interest rate changes, while continuing to do our part in supporting customers and the economy.”