Australia’s lenders were notably quicker in passing on any rate cuts to borrowers this month, according to new data from RateCity.
RateCity spokesperson Michelle Hutchinson said that in the two days following the Reserve Bank's monetary policy announcement, 13 lenders reduced their standard variable interest rates.
The results were vastly different from what the nation saw in October when just four lenders managed to change their rates in the two days following the Bank's cut to the cash rate.
“It’s unusual to see this many rate cut announcements so soon after a Reserve Bank rate change,” Ms Hutchinson said. “It shows that lenders are working harder to be more competitive with each other, to attract new customers and retain their existing borrowers.”
“The majority of these lenders have continued the trend of not passing on the full rate cut, but it’s great to see some lenders leading by example and passing on the whole 25 basis points: ING Direct, MyRate and Yellow Brick Road.
“Because of the trend for lenders to not pass on the cash rate cuts in full, it’s more important for borrowers to look at the actual interest rates they are paying, rather than the discount they receive.
“For instance, according to RateCity’s database, variable home loan interest rates start from 5.22 per cent while the new standard variable rates of the 13 lenders that have so far announced rate drops averages 6.12 per cent. This 90 basis point difference is worth an extra $163 per month or $48,900 over a 25-year loan term.”