RBA: Switch lenders if they don't pass on the cash rate cut

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on November 04, 2020
RBA: Switch lenders if they don't pass on the cash rate cut

The central bank Governor has urged people to reconsider their lender if the latest cash rate cut is not passed on.

The Reserve Bank (RBA) yesterday cut the cash rate by 15 basis points to a new record low of 0.10%, in effort to support the economic recovery from COVID-19. 

RBA Governor Phillip Lowe said should lenders not pass on this cut, borrowers should look to a new one.

"The best outcome would be for standard variable rates to be lowered but if that doesn't occur I'm confident there will be pass-through occurring through people renegotiating and switching ... I encourage everybody to go to their bank and ask for a better deal," Dr Lowe said.

"If they don't give it to you, switch to a bank that will."

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS
NSW/VIC/SA METRO & INNER REGIONAL AREAS

Variable Home Loan (Principal and Interest)

  • $5000 Cashback. T&Cs Apply.
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
NO ONGOING FEESFREE REDRAW FACILITY
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
NO ONGOING FEESFREE REDRAW FACILITY

Live-in Variable Loan (Principal and Interest) (LVR < 90%)

  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 28, 2022. View disclaimer.

At the time of writing, the only big four bank to announce cuts was Commonwealth Bank, who opted to only pass the cut onto fixed rates and not variable. 

Non-bank Athena followed their tradition of immediately passing on the cut in full, and was joined by Freedom Lend, homeloans.com.au, Reduce Home Loans, and Homestar Finance. 

See if your lender is passing on the cut here. 

Dr Lowe said negative interests remained extraordinarily unlikely, and with inflation to not be in the desired 2-3% band and full employment to be reached for some time, the cash rate would be unmoved until at least 2023. 

"For inflation to be sustainably within the target range, wage growth will have to be materially higher than it is currently," he said.

"This will require a lower rate of unemployment and a return to a tight labour market.

"On the current outlook, it will take some years to get there. Given this, the Board is not expecting to increase the cash rate for at least three years."

Treasurer expects lenders to pass on cut

Treasurer Josh Frydenberg said the RBA's cash rate cut complimented the government's economic support, and urged lenders to assist in the recovery. 

"And today's announcement by the Reserve Bank will reduce the cost of borrowing and is good news for households, good news for small businesses and it will complement what the Morrison Government has already undertaken to support job creation across the economy," Mr Frydenberg said.

"It's my expectation that the banks will now look for ways to pass on those rate cuts.

"Pass it on to small businesses and pass it on to mortgage holders." 

Mr Frydenberg said the numerous cash rate cuts this year had greatly assisted borrowers through a difficult period. 

"Well, someone with a $400,000 mortgage, which is about the average mortgage across the country, the combination of what we’ve seen from early this year to today's announcement when it’s come from down from about 75 basis points to just ten basis points, that’s worth about $1,000 a year to somebody with a mortgage of that size," he said. 

But Shadow Treasurer Jim Chalmers said the RBA's cut demonstrated the government had not done enough to tackle the jobs crisis and support the economy. 

"These extraordinary steps are a vote of no confidence in the Government’s JobFaker budget, announced less than a month ago," Mr Chalmers said.

"The RBA has been forced to enact its most radical program on record in response to the Morrison Government’s premature cuts to vital economic supports like JobKeeper during the worst recession in almost 100 years." 

Mr Chalmers said the government seemed content to let the RBA do all of the heavy lifting. 

"The Prime Minister has been slow to act during this crisis, and his Government’s deliberate decisions to exclude Australians from support mean the only lasting legacies of this crisis could be higher unemployment for longer and a trillion dollars of debt."


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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