Rate cut mostly passed on
(10 November 2008 – Australia) Banks in Australia have passed on the majority of the 75 basis point November rate cut to customers.
At around 60 basis points, banks were able to pass on the majority of the rate cut, but not all of it. The rate cuts varied between the major banks.
CBA first announced a 0.58 percent rate cut on home loans effective 10 November.
ANZ also announced that it would reduce its rates by 0.58 percent, although starting from 14 November. For ANZ, Business Lending rates are still under review, while credit card rates would be dropped the full 0.75 percent.
NAB cut standard variable mortgage interest rate by 0.62 percent and its one year Intro fixed rate by a full percentage point. In addition variable business lending rates will reduce by a smaller 0.40 percent. As with ANZ, credit card rates will be reduced by the full 0.75 percent.
Westpac outdid its Big Four peers with a 0.65 percent reduction to its standard variable home loan rate while reducing retail and business credit cards by a substantial 0.80 percent.
Of the smaller banks, BankWest dropped its rates by 0.60 percent, while Members Equity managed to pass on the full 0.75 percent rate cut. Suncorp passed on 0.61 percent, St George 0.62 percent, Bendigo 0.60 percent and BOQ 0.62 percent.
CBA’s Retail Banking Services group executive, Ross McEwan, said that CBA were not able to pass on the full rate cut due to a significant increase in all three elements of the cost of funding over recent weeks.
Raising long term funds remains extremely difficult and expensive. Similarly, the cost of short term onshore funding has increased in recent weeks and we are also experiencing increased costs in retail deposits, he said.
Further, McEwan said that CBA expects global financial markets to normalise over time and once that does occur, the bank will be able to reduce rates by more than the RBA adjustments and outside of the regular rate cycle.
The CBA sentiments were followed by a number of banks, including ANZ and NAB.
CBA first announced a 0.58 percent rate cut on home loans effective 10 November.
ANZ also announced that it would reduce its rates by 0.58 percent, although starting from 14 November. For ANZ, Business Lending rates are still under review, while credit card rates would be dropped the full 0.75 percent.
NAB cut standard variable mortgage interest rate by 0.62 percent and its one year Intro fixed rate by a full percentage point. In addition variable business lending rates will reduce by a smaller 0.40 percent. As with ANZ, credit card rates will be reduced by the full 0.75 percent.
Westpac outdid its Big Four peers with a 0.65 percent reduction to its standard variable home loan rate while reducing retail and business credit cards by a substantial 0.80 percent.
Of the smaller banks, BankWest dropped its rates by 0.60 percent, while Members Equity managed to pass on the full 0.75 percent rate cut. Suncorp passed on 0.61 percent, St George 0.62 percent, Bendigo 0.60 percent and BOQ 0.62 percent.
CBA’s Retail Banking Services group executive, Ross McEwan, said that CBA were not able to pass on the full rate cut due to a significant increase in all three elements of the cost of funding over recent weeks.
Raising long term funds remains extremely difficult and expensive. Similarly, the cost of short term onshore funding has increased in recent weeks and we are also experiencing increased costs in retail deposits, he said.
Further, McEwan said that CBA expects global financial markets to normalise over time and once that does occur, the bank will be able to reduce rates by more than the RBA adjustments and outside of the regular rate cycle.
The CBA sentiments were followed by a number of banks, including ANZ and NAB.
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