Most of the lenders we've observed tend to put about 10 days' breathing room between announcing a cut and making it a reality on their mortgages.
The worst offenders have pushed this out to nearly mid-June; for P&N Bank (a customer owned institution) changes aren't until 10 June; Bank of Us (a Tassie bank), 11 June; and Resimac (a non-bank lender), 11 June.
That's more than 20 days after the RBA announcement.
Bendigo Bank is one of the largest worst offenders with an announcement/effective gulf of 17 days, though it has well-documented struggles, particularly around margins.
Some of the worst offenders after February's cut were from BOQ Group - BOQ itself, where the time between a deposit rate cut and home loan cut was 14 days; and ME Bank, 15 days.
Virgin Money didn't pass on the cut to home loan customers at all, while it sliced 35 basis points off its savings account rate, though BOQ Group's struggles are well-documented too.
Legacy tech and regulation by themselves are not stopping banks from passing it on more quickly, though responsible lending laws enforce a delay when rates go up.
Athena, a non-bank lender, passed on the rate cut in-full and immediately to home loans, as it did back in February; ditto for Unloan, which is powered by CommBank.
Even big bank Macquarie waited only three days to make the rate cut effective, and savings account cuts happened at the same time.
The announcements made by the majors mere minutes after the RBA call are near meaningless for mortgage customers; it's just a bit of good PR.
Crunching the numbers
The average mortgage holder - $660,000 mortgage over 30 years, 6% p.a. interest rate - is better off by about $100 a month with the latest 25 basis point cut.
However, they are waiting up to 20 days for reprieve in some instances, and depending on when their repayment due dates are, a whole lot longer.
If they have savings, the rate cut is immediate.
If someone had $100,000 in savings at 5.00% p.a. cut down to 4.75% p.a. that's about $14 over the 20 days it takes to see mortgage reprieve.
This might not seem like much, but consider this in aggregate and it's millions' worth for the banks, and more still should there be more rate cuts this year.
Big bank home loan vs savings rate cuts
| Bank | Home Loan Rate Cut Effective (Announced) | Savings Rate Cut Effective (Announced) | Effective Date Gulf |
|---|---|---|---|
| NAB | 30 May (20 May) | 23 May (Same) | +7 days |
| AMP | 2 June (20 May) | 23 May (22 May) | +10 days |
| Westpac (inc St George) | 3 June (20 May) | 30 May (20 May) | +4 days |
Check the links below to see what your bank or lender is doing, if you haven't been informed.
See Also: Home Loan Rate Cuts After RBA's May Decision
See Also: Savings Rate Cuts After RBA's May Decision
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