Stephen McMahon Herald Sun October 03, 2012
AUSTRALIA'S four million mortgage holders are in limbo as the big banks refuse to pass on yesterday's interest rate cut.
Last night none of the big four banks had moved, despite the Reserve Bank delivering an early Christmas present for homeowners and retailers with a 25-point drop in the official cash rate to 3.25 per cent - its lowest level in three years.
The decision will see repayments on the average mortgage of $300,000 drop by almost $50 a month, if banks decide to pass on the cut.
The big banks will pocket more than $6 million in profit every day they fail to pass on the Reserve Bank's 25-point rate cut to mortgage holders.
The major banks will cream off a collective profit of $25 billion this year.
Treasurer Wayne Swan has demanded they do the right thing and pass on the 0.25 per cent cut in full. He said they shouldn't "crimp something from the cut".
Choice chief executive Alan Kirkland agreed.
"Australia's major banks are at near-record levels of profitability, and this is no time for them to be clipping the ticket on interest rate cuts," he said.
Last night, the big four - ANZ, Commonwealth Bank, National Australia Bank and Westpac - would say only that lending rates remained under review.
ANZ said it would not decide until its rates committee met on October 12.
The NAB said it would stand by its promise to have the lowest standard variable rate of the four major banks this year.
The official cash rate is at its lowest level since October 2009, but research from RateCity shows variable rate home loan borrowers are paying more than they were three years ago.
Since the latest rate cutting cycle began in November, the cash rate has dropped 1.5 per cent, but the average standard variable rate has fallen by only 0.97 per cent.
RBA governor Glenn Stevens cited concerns about a slowdown in global growth as China faltered as the key driver behind the RBA board's decision.
He said the economic outlook for growth had softened and the country's 5.1 per cent unemployment level looked set to rise.
But the National Seniors Association warns not everybody is a winner, with retirees living off simple term deposits to be hit hard.
ACTU secretary Dave Oliver said there was no excuse for the cut not to be passed on in full.
"The Commonwealth Bank had a record profit of $7.1 billion in the last 12 months," he said.