Major banks refuse to give full rate cut

Despite the Reserve Bank’s cash rate cut of 0.75 percent this week, most major banks are choosing not to pass on the full benefit to customers. Citing higher funding costs Westpac and NAB have passed on 0.65 and 0.62 percentage points respectively with ANZ choosing to cut standard variable interest rates by just 0.58, the same reduction that the Commonwealth Bank has adopted. AMP Banking will take up the full 0.75 percentage point reduction on it’s standard variable rate.

Meanwhile new home building remains subdued, with new home building in NSW less than half the number of new homes it was a year ago, the lowest level in the post World War II era. This reduction in supply could put pressure on home prices and rents, which would not be good news for first home buyers, or those renters saving to buy a first home. The building industry hopes that the recently increased first home owner government grant and rate cuts will spur on a recovery in the housing sector.

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