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

author-avatar By 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
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME 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%
LIMITED TIME 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%
VariableMore details
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
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
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 17, 2021. 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 which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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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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