“Smaller lenders have actually done the right thing”: Treasurer Josh Frydenberg throws shade at the big four

author-avatar By on October 04, 2019
“Smaller lenders have actually done the right thing”: Treasurer Josh Frydenberg throws shade at the big four

Image: Treasurer Josh Frydenberg (Source: Twitter)

Treasurer Josh Frydenberg has slammed the big four for not passing on the rate cut in full, as smaller lenders seize the moment.

None of the big four banks have passed on the most recent RBA rate cut in full, and the Treasurer isn’t happy about it, calling on borrowers to switch lenders.

“We continue to put pressure on the banks and ultimately it is the customers who can vote with their feet and go to their bank, seek the best possible deal and if not, take the business elsewhere,” Mr Frydenberg told ABC’s 7:30 .

“It is a pattern of behaviour by the banks. When the previous government was in, there were 14 rate cuts and only five were passed in full.

“The banks have a lot of explaining to do. People should shop around, get the best deal and make their displeasure known to their banks.”

Westpac and NAB cut rates by 15 basis points, while ANZ cut their rates by 14 basis points and Commonwealth Bank trimmed only 13 basis points.

The decision not to pass on the rate cut in full will sting borrowers of the big four, who make up 75% of the residential mortgage market according to UBS market share data.

Which lenders have passed on the rate cut in full?

Mr Frydenberg praised some of the smaller lenders for passing on the full rate cut.

“Five of the smaller lenders have passed on the rate cuts in full. So, the big banks may have thumbed their nose at their customers but some of the smaller lenders have actually done the right thing.”

Athena, Homestar Finance, and UBank (which is owned by NAB) are among the few lenders to agree to pass on each of the last three cash rate cuts in full to new and existing variable home loan customers.

Notably, both Athena and Homestar Finance are non-bank lenders.

The table below displays some of the sharpest variable home loan rates currently on offer across the big four banks, the top 10 customer-owned institutions and the larger non-banks:

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
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.^
FixedMore details
NO UPFRONT OR ONGOING FEES

Basic Home Loan Fixed (Principal and Interest) (LVR < 70%) 3 Years

NO UPFRONT OR ONGOING FEES

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 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. Rates correct as of September 25, 2021. View disclaimer.

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James Austin, Chief Financial Officer of non-bank lender Firstmac, told Savings.com.au last month the bigger non-bank lenders are in a better position to pass on rate cuts because they fund off wholesale markets, allowing them to be more efficient with their cost bases.

ANZ did pass on the full 25 basis points for people paying interest-only (IO) home loans.

Investor loans seemed to benefit the most from the rate cuts, with Commonwealth Bank passing on the full 25 basis point cut to investors on variable loans paying IO.

Meanwhile, NAB passed on a 30 basis point cut to investors on variable loans paying IO.

Customer-owned banks struggle to pass on cuts

So far, customer-owned banks appear to have struggled to pass on the most recent rate cut to home loan customers.

At the time of writing, only four customer-owned banks have publicly announced they will be passing on at least some of the cut: Qudos Bank, P&N, Newcastle Permanent and Bank Australia.

The award for stingiest rate cut so far goes to Bank Australia which announced it will only cut by 10 basis points.


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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author-avatar
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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