Banks pass on cuts
All four of the major Australian banks have passed on Tuesday’s rates cut, with ANZ being the first of to pass on the rate reduction, lowering its rates for mortgages and small business lending by 0.25 per cent, reducing its standard variable rate to 7.3 per cent.
The bank also took the opportunity to introduce a 2-year fixed term mortgage at 5.95 per cent per annum.
“In the face of the economic and banking crisis in Europe, our decision on the size of the interest rate change has been one of the most difficult we have made in recent times. Retail banking margins have been contracting as the cost of funds has progressively risen over the last six month,” ANZ CEO Australia Philip Chronican said.
“Bank funding costs are now largely unrelated to movements in the Reserve Bank’s Official Cash Rate. We have therefore taken a decision to announce future pricing changes for retail and small business variable interest rates on the second Friday of each month.
“This provides a measure of predictability for customers on when rate changes will occur and it provides us with the flexibility to reflect movements in funding costs across the full spectrum of funding sources – not solely in response to the Reserve Bank’s cash rate.”
Lisa Gray, Group Executive NAB Personal Banking, also voiced her concerns over the cuts.
“This has been a difficult decision, where we have had to weigh the concerns of our customers and the community with the rising cost of funds,” Ms Gray said.
“While we continue to be concerned about uncertainty in Europe and the impact on increased funding costs, our view is that it is important to put money back in the hands of our customers and assist with supporting the Australian economy this Christmas.