In May, your bank passed on the RBA rate drop when the cash rate dropped to a record low 1.75%. A few days ago, the RBA has announced that there would be a further 0.25% reduction to the cash rate, taking it to a staggeringly low 1.5%. While most banks passed the May rate cut in full, it appears the banks will only be passing on a portion of the rate cut this time round.
So far, of the following banks, Bank of Queensland has announced the biggest cut at 0.15%, followed by Westpac and St George at 0.14%. This is also consistent when looking at the aggregated cut from May and August – with BoQ leading the pack at 0.40%. Westpac again leads the majors at 0.39%. The poorest performer overall is ME Bank, only passing on an aggregated 0.15% across May and August.
Another key aspect of the rate cut to observe is the the speed at which the banks pass it on. ANZ is the speediest, passing on the rate cut 10 days after the May RBA announcement and similarly, 10 days yet again after the August announcement. This is almost 2x better compared to the other banks which typically pass on the cuts with a lag-time between 34 to 41 days in aggregate.
To be kept in the loop for future home loan rate changes on your own loan and any RBA rate decision movements, try Pocketbook Home Loan Insights. You will get alerted when the interest rate on your home loan changes and see how much it has changed and what that means for you.
|Bank||Date of cut||Size of cut||Total cut
(May & Aug)
|Total days after announcement|
|Bank of Melbourne||23 Aug||0.13%||0.38%||41|
|Bank of Queensland||31 Aug||0.15%||0.40%||44|
|Bendigo Bank||19 Aug||0.10%||0.30%||44|
|Commonwealth Bank||19 Aug||0.13%||0.38%||34|
|ING Direct||15 Aug||0.12%||0.37%||30|
|ME Bank||23 Aug||0.10%||0.15%||34|
|St George||23 Aug||0.14%||0.39%||41|