We could all be forgiven for forgetting what exactly happens after a Reserve Bank of Australia interest rate cut.
The last one was in November 2020 when the RBA board dropped the rate in the depths of COVID to a negligible 0.1% (ah, those were the days).
It languished there while we focused on toilet paper, home cooking, and RATs before shooting up with alarming regularity to a 13-year high 4.35% in 18 months as the economy heaved itself from slumber.
Mortgage-holders may remember how speedy their lenders were to pass on those ominous interest rate increases.
So, what have we learned about our financial institutions this week, given it’s been a while since we’ve seen them in action with a rate cut.
Westpac wins the race
It was one of our big banks that staked its claim in the speed stakes by being the first to announce it would pass on the full rate cut to its home loan customers.
The announcement was as close to instantaneous as you get after the RBA board announced the rate cut, meaning someone was literally poised with finger on the ‘Publish’ button.
Federal treasurer Jim Chalmers had warned lenders he’d be none too happy if they didn’t pass on the full rate cut to their home loan customers and so far, all have obliged.
Speed vs agility
But while Westpac may have been first to announce the change, effective 4 March, it was the plucky home loan outfit Athena that not only passed the rate cut on in full but also effective immediately.
See the full list of institutions passing on the cash rate cut
Athena has had its fair share of challenges since it burst onto the home loan market in 2019, the disruptor venture of two former NAB bankers.
It initially burned brightly as a market game changer, notorious for passing on RBA rate cuts in full just minutes after they were announced.
Although things have got a little tougher for the Athena balance sheet and there are some new shareholders on board, at least that their expediency on delivering rate cuts hasn’t changed.
And the not so speedy
As the days wore on after the heralded cash rate cut, one medium-sized bank was conspicuously silent on what its plans were – none other than one of Australia’s most trusted brands Bendigo Bank.
As lenders large and small put their cards on the table, it led to speculation Bendigo may have been doing the sums in how to get round Dr Chalmers’ directive without attracting too much blowback.
It wasn’t exactly a stellar week for the bank after all.
Bendigo released its half-year results on Monday, the day before the RBA decision, and it didn’t go too well.
It reported lower cash earnings and its all-important net interest margin, a key indicator of the bank profitability, finished six basis points lower than the previous six months.
This is despite both home lending and customer deposits going up.
The share market is a touchy beast, especially when it’s taken by surprise, with Bendigo’s share price plunging 17% on Monday.
But just when borrowers were fearing a late Friday afternoon announcement that they wouldn’t be seeing the full cut in their home loan interest rate, Australia’s most trusted banking brand came through just after lunch.
Yes, the rate cut is being passed on in full from 7 March, not out of step with when many other home borrowers will see the cut.
Dr Chalmers will be happy, not to mention the nervous home loan customers whose fears were getting the better of them.
Bendigo will work on fixing up its balance sheet without withholding from its home loan customers – for now anyway.
Big banks outline savings account cuts, except one
While banks and credit unions are understandably quick to loudly spruik their home loan interest rate cuts, the inevitable cuts to savings account rates tend to be in the fine print.
Westpac, CommBank, and National Australia Bank detailed the cuts to their savings accounts products this week, albeit at the bottom of their home loan rate announcements or in strategically placed separate announcements.
Other deposit-takers just instituted the cuts on their websites and emailed their customers directly while others say they’re still thinking about it.
See which banks have announced they are lowering savings account rates
But one of the big banks, ANZ, is yet to outline how the RBA rate cut will affect its savings account products.
ANZ announced the drop to its home loan rates on the same day as the RBA decision but, as of Friday afternoon, there is still no word on changes to its savings accounts.
Its top-rate ANZ Plus product is still offering 5.00% p.a. with a standard rate of 0.50% p.a., plus a bonus rate of 4.50% p.a. when the account is grown by $100 or more a month (not including any interest).
ANZ added the condition in October last year, also requiring ANZ Plus account holders to have an ANZ Save account.
Its optional add-on ANZ Plus Flex Saver is also still offering 5.00% p.a. on balances up to $5,000 then 2% p.a. on every dollar over.
None of the big four will offer a savings account product with a ‘five’ in front when their current changes take effect.
So, is anyone the baddie?
Let's not equate tardiness with badness, but if we have to point the finger at someone this week, it might be Virgin Money.
The Bank of Queensland-owned brand didn't join its stablemates BoQ and ME Bank in announcing variable home loan rate cuts, but it did take 35 basis points (10 more than the RBA cash rate cut) off the top rate offered on its Boost Saver Account, cutting it from 5.35% p.a. to 5.00% p.a., with conditions attached.
Surely Dr Chalmers wouldn't be too happy about that.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
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