Major banks have "no excuses" but to pass on rate cut in full: Mozo
The big four banks have held back 20% of the Reserve Bank’s rate cuts since May 2012 but have no excuses not to pass on today’s 25 basis point rate cut in full, according to mortgage comparison website Mozo.com.au
Prior to today's announcement, Mozo points out that the average big four bank standard variable home loan rate has fallen just 0.98% against the RBA's 1.25% cut over the last 12 months.
This has cost the average borrower with a $330,000 home loan $635 in missed savings over this period.
The Big Four standard variable rate of 6.42% - now 6.36% after NAB cut its standard variable rate to 6.13% - is 39 basis points higher than the market average standard variable rate of 6.03%.
Mozo managing director Rohan Gamble believes the major banks are out of excuses to explain the gap.
“With the banks reporting bumper profits this month and wholesale funding costs back to pre-GFC levels, the Big Four have run out of excuses for not passing through the full rate cut to borrowers," Rohan says.
“Holding back on rate cuts now after announcing record profits would be monumentally hypocritical and a slap in the face for every long-suffering customer.
“I believe the banks will lose a lot of customers if they hold back on rate cuts this time. Home loan comparison is already going through the roof in 2013 as low interest rates stimulate borrowers to refinance to get the best possible rate, and competition from online lenders is absolutely booming.”
Currently the lowest variable home loan rate available to refinancers is 5.09%, so an RBA cut should allow borrowers to access variable rates below 5.00% from the most competitive lenders.
Fixed rates are also continuing to drop and Rohan believes the fierce competition on the fixed rate front is far from over, with further cuts ahead.
"It's not unlikely that fixed rate mortgages could drop another 0.25% over the next few months, so they may not have bottomed as many people thought. When the banks talk of moving fixed rate mortgage rates down they suggest they expect another rate cut," Rohan says.
