Major banks are under pressure to deliver some Christmas cheer in the form of cheaper mortgages after the Reserve Bank returned its cash rate to record low levels.
The Reserve Bank of Australia (RBA) on Tuesday cut the cash rate by 25 basis points to three per cent, the lowest level since the depths of the 2008-2009 global financial crisis.
The new cash rate is also at its lowest level since the central bank began announcing its target for the cash rate in 1990.
While the Bank of Queensland (BoQ) and ING Direct were quick off the mark to reduce their standard variable mortgages, Westpac, National Australia Bank and the Commonwealth Bank remained silent.
ANZ will hold its usual monthly interest rates meeting on December 14.
Prime Minister Julia Gillard led the charge in urging the major banks to drop their lending rates, saying a cut would help families in the run-up to Christmas.
“The banks should certainly pass on in full any interest rate reduction if it is made,” she told reporters.
“It’s very close to Christmas … we want to see families benefit from any interest rate reduction that flows today.”
Treasurer Wayne Swan, retailers and farmers groups all backed Ms Gillard’s call.
Australian National Retailers Association chief executive Margy Osmond said recent delays by the major banks to pass on rate cuts had stopped consumers hitting the shops quickly.
“Dropping the cash rate to three per cent is a morale boost for retail and for Aussie consumers that will mean everyone heads into the holiday period with a smile on their faces,” she said.
“It might not be enough to have an immediate impact on Christmas sales, but may be enough to encourage shoppers into the shops through January.”
BOQ dropped its standard variable home loan rates by 0.2 percentage points to 6.51 per cent – but the reduction will not be passed on until December 21.
BoQ chief executive Stuart Grimshaw said the bank was conscious of the pressures facing all customers at this time of year.
Online lender ING Direct will pass on the full RBA cut, reducing its variable mortgage rates by 25 basis points from December 24.
“Our funding position has eased recently allowing us to pass on 25 basis points, however, the threat of elevated funding costs has not passed completely,” chief financial officer Glenn Baker said.
The NSW Farmers’ Association called on other lenders to follow suit, saying many farmers were being charged one per cent more for loans compared to mortgage holders.
“We are some of the most productive farmers in the world and yet we cannot get access to the same rates as other borrowers in Australia,” president Fiona Simson said.
