Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Australia’s biggest banks appear to be chasing new home loan business by cutting their fixed rate products, rather than supporting existing customers with variable rate mortgages.
Both Commonwealth Bank and Westpac, the nation’s largest retail banks, have used the excuse of the Reserve Bank’s 15 basis-point cut in the cash rate to a record low 0.1 per cent to cut their fixed rate home loans.
But they both left their variable rates, which are more aligned to moves in the cash rate, unchanged.
Rates on some small business loans were also cut.
But according to financial comparison site Finder, five smaller banks have cut their variable rates.
Athena Home Loans led the way on Tuesday, cutting its variable rate by 15 basis points to 2.19 per cent.
Other lenders to cut their rates were Reduce Home Loans (10-20 basis points), Homestar (15 basis points), Homeloans.com.au (15 basis points) and Freedom Lend (20 basis points).
Farmers have urged banks to pass on rate reductions in full.
“We will be watching the banks closely to ensure they do the right thing,” National Farmers’ Federation chief executive Tony Mahar said.
“It would be a shame if they undid all their good work during the COVID crisis for short-term profit taking.”
Like CBA, Westpac has cut its four-year fixed rate home loan rate to 1.99 per cent.
Westpac has also cut its one, two and three-year fixed rate home loans to 2.09 per cent, while rates on some small business loans have been reduced.
“We are in an extraordinary period with the official cash rate at a historical low and unconventional monetary policy measures in place,” Westpac’s Richard Burton said.
“It is critical we carefully manage interest rate changes, while continuing to do our part in supporting customers and the economy.”
Earlier, CBA also cut its one-year fixed rate to 2.19 per cent and its two and three year fixed rate to 2.14 per cent, as well as some business loan rates.
CBA retail banking executive Angus Sullivan said the RBA’s move would lower the structure of interest rates and provide confidence that Australians can borrow over the long term at historically low rates.
“We have reflected this in our interest rate settings, offering customers our lowest ever fixed rate,” he said.