With the majority of lenders not passing on the full 0.25% RBA interest cut, some industry pundits are questioning the fairness of this decision.
None of the big four banks passed on the full reduction, which FBAA spokesperson, Peter White, has described as disappointing.
“Banks must protect shareholders but they also must look after their customers. It was disheartening to find the [majors] not passing on the full reduction which most banks passed on during the last official rate reduction in May,” says White.
He is also questioning the length of time the major lenders are taking to introduce the new rates, which start at a minimum of three weeks after the RBA’s reduction on Tuesday 2 August.
“When rates rise the lenders lift their variable rates immediately. Again it is the customer who is being treated poorly,” White adds.
Mortgage Choice CEO, John Flavell, agrees.
“While some lenders are quick in announcing these partial rate reductions, it takes them a little longer to implement these cuts at all – it can sometimes be weeks and/or months,” he says.
“There is no reason why a lending institution cannot pass on rate reductions to their customers as soon as they are announced. By choosing to delay their approved rate cuts, these lenders are further adding to their swelling bottom lines at the expense of their customers.”
Flavell says he is also disappointed some lenders are choosing shareholder profits over customer outcomes.
“It was deeply disappointing to hear some of the nation’s largest and most profitable lending institutions announce that only 10 or 13 of the 25 basis point reduction would be passed on to their mortgage customers,” he notes.
Flavell highlights there is still a high degree of market volatility.
“Unemployment has edged slightly higher over the last month, consumer confidence is down, and housing affordability remains a critical issue for many,” he says.
“Knowing this, I would like to see more of our lenders act in the interests of their customers.”
Published on: Monday, August 08, 2016