Under 10% of big bank mortgage customers have reduced their repayments after cash rate cuts

author-avatar By on November 12,2019
Under 10% of big bank mortgage customers have reduced their repayments after cash rate cuts

The big four banks have revealed the number of customers who’ve elected to reduce their mortgage repayments in the months following the recent cash rate cuts.

As part of the review of the four major banks, House of Representatives Standing Committee on Economics Chair Tim Wilson asked the big banks how many customers have had their repayments reduced since the Reserve Bank’s first cash rate cut in June.

The responses from each of the major banks revealed that fewer than 10% of variable-rate principal and interest (P&I) home loan customers have reduced their monthly repayments.

The nation’s biggest lender, Commonwealth Bank, said about 69,000 of its one million variable P&I mortgage accounts chose to reduce their repayments (6.9%), worth about $116 million.

ANZ, who has about 680,000 of these customers, said about 7% had cut their repayments.

ANZ estimates the reduction in interest due as a result of the two reductions in June 2019 and July 2019 to be worth approximately $57m per month.

Westpac said 0.9% of its 1.1 million variable P&I customers had reduced their interest rate, while NAB cited 0.7% of its customers had reduced from the June and July rate cut (not counting the October rate cut).

big 4 rate cut

Source: House of Representatives. *NAB data only includes responses to June and July rate cuts

Out of the 75 basis points of cash rate cuts over June, July and October, the big four reduced variable home loan rates by an average of 57 basis points.

Why so few?

Lenders typically require home loan customers to notify them if they want their repayments lowered following a cash rate cut.

In its response to the committee, the Commonwealth Bank said it proactively notifies customers if they are eligible to reduce their minimum repayment amounts.

“These customers have the choice to contact us online, via phone or branch to inform us they would like to reduce their monthly repayments to their new minimum repayment,” Commonwealth Bank said.

But some banks reduce customers’ repayments automatically.

For example Bankwest, which is owned by Commonwealth Bank and manages about 173,000 variable P&I mortgage accounts, automatically passes on the interest savings to the customers from the effective date of the interest rate change.

In its November monetary policy statement, the Reserve Bank of Australia (RBA) acknowledged the low number of people who’ve requested their bank to lower their home loan repayments.

“To date, the pick-up in new borrowing has been accompanied by faster repayment of existing loans,” the RBA said.

“This is consistent with historical experience that only a small share of borrowers on variable-rate mortgages actively adjust their scheduled repayments in the months following interest rate reductions.”

Further in its response, CommBank pointed out the benefits borrowers may have by not reducing their repayments in line with the cash rate cuts.

“If the customer chooses not to reduce their monthly repayments to reflect a recent rate change, then the differential is paid towards their loan in the form of an advance repayment,” Commbank said.

“If they have a loan with a redraw facility available, the differential may accumulate in the redraw for them to access later – providing flexibility to manage their financial circumstances beyond their home loan.”

If you’re looking to refinance to a lower rate home loan, below are some of the lowest variable home loan rates on offer between the big four banks, customer-owned banks and larger non-banks.

Provider Ad rate
Comp rate*
Purchase or Refi, P&I 80% Smart Home Loan 2.88% 2.90% $1,660 More details
Discount Variable 80% 3.07% 3.12% $1,702 More details
Base Variable Rate Special P&I 3.20% 3.20% $1,730 More details
Ad rate
Comp rate*
Purchase or Refi, P&I 80% Smart Home Loan
2.88% 2.90% $1,660
More details
Discount Variable 80%
3.07% 3.12% $1,702
More details
Base Variable Rate Special P&I
3.20% 3.20% $1,730
More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 2 December 2019. View disclaimer.


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 2019. They are (in descending order): Credit Union Australia, 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 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

In the interests of full disclosure, Savings.com.au 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 includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.

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William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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