What the big bank rate cuts mean for mortgage holders


Liz Seatter

Liz Seatter

Jul 3, 2019( 4 min read )

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Wednesday 3 July 2019: Australia’s central bank might have cut the cash rate by 0.50 per cent over the last two months but all four banks have decided to keep a portion of the cuts back from their variable rate home loan customers. 

What the big banks are passing on to their variable rate home loan customers:

Lender

June rate cut

July rate cut

Total rate cut

CBA

0.25%

0.19%

0.44%

Westpac

0.20%

0.20%

0.40%

NAB

0.25%

0.19%

0.44%

ANZ

0.18%

0.25%

0.43%

Note: the above rate cuts are for owner occupiers paying principal and interest. In July CBA is giving a 0.25 per cent cut for customers paying interest-only, while Westpac is handing down a 0.30 per cent for investors paying interest-only. 

How much will the average home owner save?

The typical Australian is with a big four bank on a discounted variable rate. RateCity.com.au has calculated what the last two months of rate cuts means for them, based on a $400K loan.

Old rate (May)

New rate (July)

Monthly savings

Annual savings

Missed monthly savings

Missed annual savings

CBA

4.77%

4.33%

$105

$1,259

-$14

-$169

Westpac

4.58%

4.18%

$94

$1,133

-$23

-$279

NAB

4.51%

4.07%

$103

$1,239

-$14

-$166

ANZ

4.56%

4.13%

$101

$1,215

-$16

-$195 

Note: the above calculations are based on a person with a $400K, 30-year loan on a discounted variable rate with one of the big four banks. Missed savings are calculated based on what a customer would have saved if the bank had passed on both rate cuts in full. 

Big four banks – state of play

As a result of today’s announcements, CBA and NAB are set to have the lowest ongoing variable rates from the big four banks at 3.35 per cent.

Standard Variable Rate

Discounted Variable Rate

Lowest variable rate

CBA

4.93%

4.33%

3.35%

Westpac

4.98%

4.18%

3.58%

NAB

4.92%

4.07%

3.35%

ANZ

4.93%

4.13%

3.38%

Note: Rates are based on an owner-occupier paying principal and interest repayments on $400,000, 30-year loan.

Big bank rate cuts – effective dates: 

ANZ and NAB are passing on this round of rate cuts within the first two weeks while CBA is once more taking three weeks to pass the latest rate cut on to home loan customers.

  • CBA rates effective 23 July 2019
  • Westpac rates effective 16 July 2019
  • NAB rates effective 12 July 2019
  • ANZ rates effective 12 July 2019

Some of the lowest ongoing variable rates following Tuesday’s cut:

  • Reduce home loans: 2.89%
  • Homestar Finance: 2.99%
  • Athena home loans: 3.09%

Comments from RateCity.com.au research director Sally Tindall:

 “The majority of variable rate home owners are set to save over $100 a month as a result of these two cash rate cuts. For many it’s money they can spend paying off the winter electricity bills, buying groceries or on extra mortgage repayments. 

“The extra cash might  feel like a win for families, but that doesn’t necessarily mean they’re on a good home loan wicket. Rates have dropped to as low as 2.89 per cent which is well below any of the big banks’ offerings.

“Any cut to the cash rate is always a double-edge sword as savers brace for another round of deposit rate cuts.

“RateCity.com.au’s average savings rate is 1.51 per cent but this is set to drop below inflation in coming days as this most recent cash rate cut gets passed on,” she said.

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