Big banks cut fixed mortgage loans but leave variable rates unchanged

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“Banks have over $ 100 billion in liquid assets on which they will now earn 15 basis points less,” he said. “So by not passing the reduction on to the standard floating rate holders, they are recouping some of the loss margin.”

Le Mesurier added that the “biggest losers” were retirees who rely on interest payments. “Think of the people who have been prudent savers all their lives and now get next to nothing on their deposits, they will get even less.”

KPMG chief economist Brendan Rynne agreed, saying “bank customers are not just borrowers.”

“There is a fair balance between how a bank treats its borrower book and its deposit book,” he said. “There is an impact on the portfolio that must be taken into account.”

Dr Rynne said monetary policy becomes less effective once the liquidity rate drops below 2% and wider cuts in bank rates won’t necessarily stimulate the economy.

“According to consumer sentiment and confidence, it is not clear whether interest rate savings could continue through the December quarter.”

The CBA and Westpac also cut their fixed rate business loans, including those using the government’s small business loan guarantee program, by 0.5% and 0.56% respectively. NAB and ANZ have cut rates on unsecured business loans by up to 4%.

CBA retail banking director Angus Sullivan said the RBA’s cash rate cut should give borrowers confidence. “We have reflected this in our interest rate settings, offering clients our lowest fixed rate on record,” he said.

Westpac chief consumer officer Richard Burton said it was an “extraordinary time” for monetary policy and interest rate changes needed to be carefully managed.

“We recognize that this has been a difficult time for many Australian households, and these changes mean that customers will be able to access even lower interest rates on our home and small business loans,” he said. he declares.

Rachel Slade, director of personal banking at NAB, said the changes were aimed at providing certainty for customers and supporting credit collection. “This is the sixth reduction in the cash rate in the past 18 months,” she said, adding that banks needed to balance portfolios.

While the CBA was the first major bank to take the step, a series of smaller lenders immediately responded to the flow of cheaper money. Canstar research shows that six smaller lenders, including fintech Athena and Pacific Mortgage Group, cut variable rates between 0.10% and 0.16%.

The RBA’s rate cut will stay in place for at least the next three years, giving banks and other lenders certainty about their funding costs.

It comes after the CBA on Tuesday announced a moratorium on forced home sales until September 2021 for borrowers struggling with repayments during the coronavirus pandemic.

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