Bankmecu puts major banks in the shade as just four out of 13 lenders pass on full rate cut: Ratecity.com.au

Only four out of the 13 lenders that have announced interest rate reductions since the October 2 RBA cash rate cut have passed on the full 25 basis points, according to research by mortgage comparison website Ratecity.com.au

The lenders that have passed on the full rate cut include bankmecu, which also offers the lowest standard variable rate of the 13 lenders at 5.49%.

This is 108 basis points lower than the lowest standard variable rate offered of the big four – NAB, which has a new standard variable rate of 6.58% and 121 basis points lower than Westpac, which will decrease its SVR to 6.71% from October 15.

The other lenders to have passed on the full rate cut are ING Direct (standard variable rate of 6.09%*), non-bank lender Myrate (5.92%) and Mark Bouris’s Yellow Brick Road wealth management business (6.19%).

Bankmecu is a customer-owned mutual bank based in Melbourne and is made up of conglomerate of around 50 credit unions and co-operatives.

It received its APRA banking licence in September 2011.

“By being a bank we believe we can compete with the big banks on their own turf, while retaining our unique customer ownership,” said CEO Damien Walsh at its launch.

Prior to it operating as a bank, it was called the Members and Education Credit Union (mecu).

According to the most recent APRA figures, bankmecu had a loan book of around $2 billion with around $1.9 billion in household deposits.

Apart from ING Direct, these four lenders are all tiny when compared with the major banks, which have passed on between 18 and 20 basis points and have blamed the high cost of raising deposits and need to balance the competing needs of shareholders, savers and mortgage customers for their inability to pass on the full rate cut.

ANZ will make its independent interest rate decision on Friday but is unlikely to pass on the full rate cut.

"Out of the 13 lenders that have so far announced rate drops, only four passed on the full 25 basis point cut to their standard variable rates, and Greater Building Society passed on 25 basis points to its packaged home loan as well. The movements were between 15 and 25 basis points," says Ratecity.com.au’s spokesperson Michelle Hutchison

"There is a significant difference between the amount of money borrowers will save, depending on how much their lender passes on. For instance, a 15-basis-point rate cut to a new rate of 6.25% for a $300,000 mortgage is worth about $29, while a 25-basis-point rate cut to 6.19% is about $49 per month."

*Ratecity.com.au had prevously specified ING Direct's standard variable rate as 5.73% and was the rate originally published in this story.

The rate of 5.73% is the new rate for loans under $500,000 with a max LVR of 80%.

The 6.09% reate reflects the new rate for ING Direct's Orange Advantage .

Ratecity.com.au wishes to clarify that ING Direct’s cheapest advertised variable rate is currently 5.88% (before the rate cut) for loans over $500,000 with a maximum loan to value ratio of 80%.

"However, this rate and other home loan rates with different tiers and LVRs are not shown on the ING Direct website. The new rate of 5.73% originally referred to in the article is for loans with an LVR up to 80%. RateCity often publishes lenders’ standard variable rates because lenders use these as benchmarks and announcements for their rate decisions," explained Ratecity.com.au.

RateCity would like to clarify that the above interest rates shown in this story sourced by RateCity are accurate and RateCity prides itself in publishing factually correct and unbiased information.