A total of 30 lenders have cut new customer rates this month ahead of Tuesday’s RBA meeting but only for new customers or those willing to fix.
Yet it’s the people who can’t refinance who are in desperate need of a rate cut.
How much existing customers can save if the banks pass a rate cut on:
|Loan size||Monthly savings||Annual savings|
Source: RateCity.com.au. Assumes an owner occupier paying principal and interest over 30 years. This scenario is based on the current average rate of 3.19 per cent.
The latest ABS data shows over 137,000 loans have been refinanced over the last five months to August as home-owners take advantage of record-low rates.
By comparison, the ABA said around 500,000 home loans were deferred at the peak and while around half are now making repayments, many are still not in a position to refinance to save money.
RateCity.com.au research director, Sally Tindall, said there was increasing pressure on the banks to do the right thing, particularly as many lenders failed to pass on the last RBA cut to their variable customers.
“Governor Lowe believes a rate cut now will help reduce the number of problem loans, but this will only work if the banks pass it on,” she said.
“Record-low rates have been a shot in the arm for the tens of thousands of mortgage holders who have been able to refinance their loan during COVID.
“At the same time there are hundreds of thousands of Australians who haven’t been so lucky, forced to put their mortgages on hold as they struggle to stay afloat. These are the people who need a rate cut, now more than ever.
“Many people who have had to defer their mortgage or switch to interest-only repayments aren’t being offered the best rates from their lender.
“Banks should do the right thing by these customers by passing any RBA cut on to them as quickly as possible,” she said.
Savings rates continue to plummet
Across the board, savings rates have been tumbling since the last RBA rate cut in March.
Today Australia’s third largest bank, NAB, has become the latest to make cuts, shaving 0.10 per cent off the bonus rate of its iSaver and Reward Saver accounts.
RateCity.com.au database analysis of savings accounts:
- This month 50 banks have cut savings rates (that’s half of all banks).
- Big four banks CBA, Westpac, NAB and ANZ have cut at least one savings rate this month.
- The big four bank average conditional savings rate is now 0.66% (it was 1.39% pre-COVID)
- The highest ongoing savings rate is currently 1.60% (note this rate will be cut on 1 Nov).
RateCity.com.au research director Sally Tindall said banks are doing a spring clean of their savings rates ahead of any official move from the RBA.
“If the RBA cuts the cash rate on Melbourne Cup day, savings rates will sink even further, particularly bonus rates where there’s something left to cut,” she said.
“Some banks will also make the difficult decision to cut their base rates down to zero, giving many of their customers nothing more than a safe place to park cash.
“As a result, people could seek out riskier investment options in a bid to get more from their money,” she said.