The Bank of Queensland-owned outfit was suspiciously quiet when its parent company and stablemate ME Bank announced more than a week ago that they would be passing on the full 25-basis point cut to their variable-rate home loan customers.
See also: RBA rate cut February 2025: Is your lender passing it on?
Not only did Virgin Money keep its home loan customers guessing, but it also moved swiftly to cut 35 basis points from the top rate offered on its Boost Saver Account, dropping the rate from 5.35% p.a. to 5.00% p.a.
It didn't go unnoticed that the drop was 10 basis points more than Reserve Bank of Australia’s cash rate cut.
On Friday, Virgin Money finally confirmed the suspicions of its increasingly nervous home loan customers with the following announcement:
Virgin Money variable home loan interest rates for new and existing loans will remain unchanged following the RBA’s February 2025 cash rate change.
That means Virgin Money’s advertised variable home loan rate for an owner-occupier making principal and interest (P&I) repayments remains at 6.44% p.a. (6.58% p.a. comparison rate*) for loan-to-value ratios (LVRs) under 80%.
Existing 'back book' customers may have different interest rates.
Why has Virgin Money withheld the cash rate cut on home loans?
Virgin Money’s miserliness is undoubtedly linked to the fortunes of its parent company.
In Bank of Queensland’s full-year results, released in October 2024, the bank announced net profits after tax were down 24% on the previous financial year with operating expenses up 6%.
The bank’s all-important net interest margin (NIM), a key indicator of bank profitability, also took a 13-basis point dive to 1.56% with its home lending book shrinking by nearly $1 billion overall.
Virgin Money lost the lion's share - $1.27 billion in total - with only growth in ME Bank's home lending in the first half that stemmed the group's overall losses.
Virgin Money was also the only one of the three entities to record a greater loss in the second half, with BoQ and ME both achieving modest gains.
BoQ makes “conscious decision”
But the results were better-than-expected for BoQ which has been mired in a costly and ongoing quest to update technology to allow it to better compete in the lower-cost digital banking space.
The company said the losses were in part due to “lower returning legacy platform” loan originations, including a decision to pause BoQ and Virgin Money broker channels.
It said it had made a "conscious interim decision" to “recycle lower performing home lending capital” into better performing segments, such as business lending.
But BoQ’s Virgin Money home borrowers were not the only ones to miss out on the rate cut with the bank also electing not to pass the rate drop on to its Specialist home loan customers.
BoQ Specialist, a division that provides finance for medical and other professionals, also made the announcement on Friday it would not pass on the rate cut.
Other fights to fight
As part of its revamp, Bank of Queensland is also in the process of buying out its 114 franchised branches by March, ending the owner-manager franchise model that had previously been the basis of its corporate strategy.
The bank is aiming to take over all its franchisee branches to give it better control over any future branch closures in its bid to cut costs.
If Virgin home loan holders are unhappy with their financial lot, many of BoQ's franchisees are just as incensed by head office’s valuation and buyout terms.
The bank has been negotiating with a group of franchisees dissatisfied with their buyout offers.
Customer revolt?
Virgin Money’s failure to pass on the RBA rate cut hasn’t gone unnoticed on social media channels.
One user on Reddit’s AusFinance forum asked whether it was time to jump ship from Virgin Money.
Another user who reported being a Virgin Money borrower said they would be refinancing to another lender “asap”.
Yet another questioned why, after 13 cash rate hikes, someone at Virgin Money thought it was “ops normal” yet still dropped the savings rate, urging current Virgin Money customers to use their feet.
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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 5.95% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
