ANZ is able to receive a full rate cut as peers hold back

The official cash rate was cut by the Reserve Bank of Australia for the second consecutive month. Four banks have announced rate cuts. Only ANZ will pass the reduction on to its borrowers.

ANZ received a lot of criticism after it failed to pass the rate cuts. ANZ cut all variable interest rates on residential loans and home loans up to 25bps after the RBA announcement.

Mark Hand, ANZ Group’s executive for Australia retail & business, stated that many factors were taken into consideration when making its decision. These factors included market conditions, business performance and possible impacts on borrowers.

“We have decided reduce variable interest rates on home loans by 0.25 percent per year. He said that the reduction would apply to all home loans with variable rates. We believe this decision is best for our home loan customers and our business.

Westpac offers loans to investors

Westpac chose not to pass the entire rate reduction and instead offered a 20 basis-point reduction.

Investors with interest-only repayments will receive a 0.30% reduction in the fixed rate.

David Lindberg (chief executive at Westpac) stated that Westpac’s decision was driven primarily by the decline of the cash rate, historically low interest rates, and David Lindberg.

“It’s critical that we continue to manage our business in an sustainable manner for longer-term and consider all of our stakeholders,” he said.

Commonwealth bank woos savers

Commonwealth Bank will reduce standard variable rates to investors principal and interest payments by 19 basis point. For residential and investment loans, interest-only borrowers will see a 0.25 percent reduction in the mortgage interest rates.

The bank will offer a five-month special rate deposit rate of 2.20% for a deposit. This rate is 0.20% lower than the regular rate.

“With official interest rate settings already at record lows, we are focused on balancing the benefits and the costs of further interest rate reductions between our 1.6 million home loan and over 6 million savings customers,” Commonwealth Bank group executive for retail banking services Angus Sullivan said.

Existing pensioner customers may also be eligible for an additional bonus of 0.1% on the term deposit offer. This will increase the rate to 2.30%. 

NAB announces a cap on savings rate reductions

In response to the RBA rate reduction, NAB will reduce its variable rates by 19 basis point. Mike Baird is NAB’s chief consumer officer for consumer banking. He stated that NAB decided not to pass the full rate cut due to funding costs and competitive pressures.

He explained that banks face constant difficulties in balancing their books. With nine million customers, it was important for the Australian economy that it makes the right decision for its customers.

He stated however that the bank would not lower its savings rate by more then 19 basis points.

He said that decisions such as these are hard and reflect our unique circumstances, with record low home loan rates and record-low deposit and savings. This decision was made after considering all our customers: farmers, retirees, and anyone who wants to save money.

Below is a list of the rate reductions made by the four largest banks.