NEARLY a week after the Reserve Bank cut rates to accommodate the slowing economy, only four lenders - none of them majors - have passed along the full 25 basis point reduction. St George Bank cut 17 basis points from its standard variable rate yesterday, in line with the less generous trend of its peers. The Westpac-owned bank has lowered its mortgage rate to 6.69 per cent, effective from next Monday, citing a need to keep the business strong.
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The St George retail banking head, Andy Fell, said the Reserve Bank's 25 basis point cut last week would give needed support for the Australian economy.
''It's important that we balance this need with the need to keep our business strong for the long term - for the benefit of our customers and the economy as well,'' he said.
The financial comparison site RateCity found only 13 lenders had reduced rates as of last night. The cut by St George followed the modest 18 basis point cut by its parent company, Westpac, on Friday to 6.71 per cent. Rivals Commonwealth Bank and National Australia Bank also helped themselves to some margin last week, holding back 5 basis points each in cutting to 6.6 per cent and 6.58 per cent, respectively.
Big banks point to the high cost of funding as a justification for holding back the full rate cut from mortgage customers. At the same time, the steep slowdown in mortgage borrowing has put the banks under pressure to cut costs and find new sources of revenue.
Combined, the big four earned an estimated $6.2 million each day they withheld their rate cuts from consumers, raising the ire of customers whose monthly payments fluctuated with the variable costs.
Among the second-tier banks, Bank of Queensland chopped its standard variable rate by 20 basis points to 6.71 per cent, and the Newcastle-based Greater Building Society cut its mortgage rate by 15 basis points to 6.25 per cent. The Westpac-owned Bank of Melbourne cut 20 basis points to 6.6 per cent.
Bankmecu and ING both passed on the full 25 basis points, taking their standard variable rates to 6.19 per cent and 6.09 per cent, respectively.
The online lender MyRate and Mark Bouris-led Yellow Brick Road also cut by 25 basis points to 5.92 and 6.19 per cent respectively. NAB has pledged to offer the lowest standard variable rate of the majors through 2012, and ANZ won't update the market on its mortgage pricing until Friday.
"There is a significant difference between the amount of money borrowers will save, depending on how much their lender passes on,'' Michelle Hutchison, of the financial comparison site RateCity, said.
A 15 basis point cut on a $300,000 mortgage at 6.25 per cent is worth about $29 a month, and a 25 basis point cut about $49.
