Face of Nation : Mr Frydenberg has called on mortgage holders to quit major lenders because they didn’t pass on the full cut of 25 basis points. Federal Treasurer Josh Frydenberg is trying to shame the big four banks to pass on an interest rate cut but he can’t do more than urge consumers to move their money.
“It is a pattern of behaviour by the banks. When the previous government was in, there were 14 rate cuts and only five were passed on in full.” But he flagged five of the smaller lenders had passed on the rate cuts in full.
“The big banks may have thumbed their nose at the customers but some of the smaller lenders have actually done the right thing,” Mr Frydenberg said. Prime Minister Scott Morrison has also accused the banks of “profiteering” after the official interest rates dipped below one per cent for the first time, hitting a record low of 0.75 per cent in the third cut since June.
Westpac and ANZ joined the Commonwealth Bank and NAB on Wednesday to reveal their standard variable rates would drop between 13 and 15 basis points instead of the full 25 basis points. ANZ did pass on the full rate cut for people paying interest-only home loans.
All four banks opened share trading lower on Thursday morning, following a second day of significant falls on Wall Street. The banks state they needed to keep some margins in a low interest rate environment, and protect customers who save deposits.
“They’ll put their explanations out there and the public will judge them based on what they say, but I’m not buying it,” Mr Morrison said, adding the banks “never learn”. Opposition Leader Anthony Albanese said the government was complacent about the banks and the economy. “The government needs to pressure the banks into passing on the full amount,” he said.
Comparison site Mozo estimates the big four banks have clung onto an extra $4.7 billion since 2016 by not passing on the full cuts. The Reserve Bank is already preparing to cut rates further if the economy remains stagnant.
Meanwhile, Australia’s trade surplus fell to a slightly softer-than-expected $5.93 billion in August, narrowing 18 per cent from July’s revised $7.25 billion due to lower commodity prices.
Other economic figures show wage growth is low, jobseekers far outstrip job vacancies, and retail spending is struggling. The Reserve Bank said the rate cut was aimed at driving unemployment lower and lifting inflation. While the share market result was rough for the big banks and other major companies, CommSec economist Craig James says it hasn’t been all bad news.
