Australia’s big four banks are facing bipartisan condemnation after rejecting calls from both sides of politics to pass on the Reserve Bank’s rate cut in full.
Westpac and ANZ announced this afternoon that variable rates would be reduced for home loan lenders by 0.15 and 0.14 percentage points respectively.
NAB had already said it would cut its rate by 0.15 while the Commonwealth Bank is passing on just 0.13 per cent to its variable mortgage borrowers.
RBA governor Philip Lowe slashed the official rate by 25 basis points yesterday to just 0.75 per cent — the first time it has ever fallen below 1 per cent.
Prime Minister Scott Morrison savaged the nation’s four biggest lenders, labelling the decision to pass on just a part of the RBA’s cut as “profiteering”.
“They never learn, they honestly never learn and it’s disappointing,” he said in an interview on Sky News this afternoon.
“I suspect we’re both mortgage holders and like all the other mortgage holders they have a reason to be disappointed in the banks basically profiteering.”
ANZ retail and commercial executive Mark Hand said the major lender was forced to weigh up the needs of its customers in a period of extremely low interest rates with the performance of its business.
“While we recognise many customers will use this as an opportunity to pay down their existing home loans faster, we hope this provides the economic stimulus the Reserve Bank is wanting to generate,” he said in a statement.
“We have also announced a new fixed rate of 2.98 per cent for homeowners paying principal and interest with either two or three year terms available from tomorrow. This is the lowest residential rate on record for ANZ.”
But Mr Morrison said it will now be up to Australians to express their own displeasure at the response from the banks.
“They’ll put their explanations out there and the public will judge them based on what they say but I’m not buying it,” he said.
Many of the smaller lenders have enacted the full reduction, however, including Athena, Homestar, Auswide, and UBank.
Treasurer Josh Frydenberg implored Australians to punish the big four banks by voting “with their feet” and moving to another lender.
“The banks have a lot of explaining to do because this is very disappointing,” Mr Frydenberg told Channel 9 today.
Opposition Leader Anthony Albanese joined the chorus and demanded action.
“The banks need to pass on the interest rate cut in full and the government needs to do something about it,” he told reporters in Queensland. “They can’t just sit back as spectators while this occurs.”
The Australian Chamber of Commerce and Industry urged the banks to pass on the rate cut in full to lift spending on retail.
“Small businesses have been doing it tough over the past year. This has particularly affected discretionary spending in small retail businesses, including cafes and restaurants,” chief executive James Pearson said.
Yesterday was the third time RBA governor Philip Lowe slashed the official rate since June but he predicted further cuts over the coming months.
“The board took the decision to lower interest rates further today to support employment and income growth and to provide greater confidence that inflation will be consistent with the medium-term target.” he said.
“It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target.”
BIS Oxford Economics chief economist Dr Sarah Hunter said the RBA board projected inflation to remain around 2 per cent for another two years, “which suggests there will not be a rate rise until the end of 2021 at the earliest.”
AMP chief economist said he expected another 25 basic point cut in November and then again in February.