How banks responded to the latest rate cut
With the cash rate sitting at 2 per cent, many industry experts believe we’re entering uncharted territory. Markets across the country – and in particular in Sydney – are starting to see the flow on effect of the second rate cut for 2015.
The RBA’s decision to cut the cash rate by 25 basis points in May led to movement across interest rates, including one bank reducing its variable rate to an all-time record.
Here’s what happened across the Big Four banks following the May rate cut.
ANZ was the first to announce its plans following the RBA’s decision to cut rates. The bank passed on the cut in full and its variable retail home loan rates fell be 25 basis points, effective from 8 may. This reduced the bank’s variable interest rate to a record of 5.38 per cent per annum.
Commonwealth Bank (CBA)
CBA left some margin, passing on 20 basis points which reduced its standard variable rate to 5.45 per cent per annum. The bank passed on the full 0.25 per cent cut to its business customers and raised rates on its eight month term deposit and “Goal Saver” account to 3.05 per cent per annum. The cuts came into effect on 13 May.
National Australia Bank (NAB)
NAB followed in the CBA’s footsteps, cutting its variable home loan rate by 20 basis points and passing the cut in full to its business customers. this brought its standard variable rate to 5.43 per cent per annum, effective from 13 May. Although its lowest level in 37 years, NAB previously held the lowest advertised variable rate but lost the title to ANZ this month.
Westpac also held back from passing on the full rate cut to its customers, opting to cut 22 basis points off its variable home loan, which lowers the rate to 5.48 per cent per annum as of 18 May. The bank followed suit with NAB & CBA and passed on the full rate cut to its business customers. Westpac also increased its nine month term deposits to 3.05 per cent per annum,.
Although finding the lowest interest rate might seem like the most attractive option for our clients, it’s important to consider other factors such as the features and fees associated with the home loan package. With deals changing across most lenders, it’s a great time to talk to our customers to find out if their current home loan is the right one for their personal circumstances.
Rates are current as at 8 May 2015. The information provided in the above article was sourced from reports in the Sydney Morning Herald.