Westpac and ANZ refuse to pass on cuts
Australia's big four banks are facing bipartisan condemnation after rejecting calls from both sides of politics to pass on the Reserve Bank's rate cut in full.
Westpac and ANZ announced this afternoon that variable rates would be reduced for home loan lenders by 0.15 and 0.14 percentage points respectively.
NAB had already said it would cut its rate by 0.15 while the Commonwealth Bank is passing on just 0.13 per cent to its variable mortgage borrowers.
RBA governor Philip Lowe slashed the official rate by 25 basis points yesterday to just 0.75 per cent - the first time it has ever fallen below 1 per cent.
ANZ retail and commercial executive Mark Hand said the major lender was forced to weigh up the needs of its customers in a period of extremely low interest rates with the performance of its business.
"While we recognise many customers will use this as an opportunity to pay down their existing home loans faster, we hope this provides the economic stimulus the Reserve Bank is wanting to generate," he said in a statement.
"We have also announced a new fixed rate of 2.98 per cent for homeowners paying principal and interest with either two or three year terms available from tomorrow. This is the lowest residential rate on record for ANZ."
Many of the smaller lenders have enacted the full reduction, however, including Athena, Homestar, Auswide, and UBank.
Treasurer Josh Frydenberg implored Australians to punish the big four banks by voting "with their feet" and moving to another lender.
"The banks have a lot of explaining to do because this is very disappointing," Mr Frydenberg told Channel 9 today.
Opposition Leader Anthony Albanese joined the chorus and demanded action.
"The banks need to pass on the interest rate cut in full and the government needs to do something about it," he told reporters in Queensland. "They can't just sit back as spectators while this occurs."
We’re decreasing interest rates for variable home loan customers by 0.15% p.a. from Wednesday 16 October.— Westpac Bank (@Westpac) October 2, 2019
The Australian Chamber of Commerce and Industry urged the banks to pass on the rate cut in full to lift spending on retail.
"Small businesses have been doing it tough over the past year. This has particularly affected discretionary spending in small retail businesses, including cafes and restaurants," chief executive James Pearson said.
Yesterday was the third time RBA governor Philip Lowe slashed the official rate since June but he predicted further cuts over the coming months.
"The board took the decision to lower interest rates further today to support employment and income growth and to provide greater confidence that inflation will be consistent with the medium-term target." he said.
"It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target."