How the banks responded to the latest rate cut
With the cash rate sitting at 2.00%, 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 low.
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 by 25 basis points, effective from 8 May. This reduced the bank's variable interest rate to a record low of 5.38% p.a..
Commonwealth Bank (CBA)
CBA left some margin, passing on 20 basis points which reduced its standard variable rate to 5.45% p.a.. The bank passed on the full 0.25% cut to its business customers and raised rates on its eight month term deposit and "GoalSaver" account to 3.05% p.a.. The cuts come 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% p.a., 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% p.a. as of 18 May. The bank followed suit with NAB and CBA and passed on the full rate cut to its business customers. Westpac also increased its nine month term deposits to 3.05% p.a..
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.