First bank to pass on RBA's interest rate cut to mortgage holders
Just two minutes after the announcement, Macquarie said customers on a variable rate will enjoy a 0.25 per cent reduction in their interest repayments. The move will be effective from August 15, and will bring the bank's new best variable rate to 5.44 per cent.
Canstar data insights director Sally Tindall told Yahoo Finance it's a warranted move after many suffered through rising interest rates for years. But she also warned other lenders to jump on the bandwagon as homeowners deserved the relief.
"This will be the third cut after 13 rate hikes. It's not time to be hitting the brakes on passing on rate cuts," she said.RELATED
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Money.com.au's mortgage expert, Debbie Hays, echoed this sentiment and called on lenders to let homeowners know sooner rather than later.
'There's greater scrutiny on lenders this time around because borrowers were already expecting relief last month and they didn't get it," she said.
"Following the false start in July, all eyes will be on the banks to pass on this rate cut in full and quickly. Not doing so would be a PR nightmare for any lender in the current climate.
'Some lenders even moved early, and cut both variable and fixed rates before the RBA even met, because markets had priced in the decision for some weeks. Given the cut was almost guaranteed, banks have had more time than usual to prepare, so there's little excuse for delay or inaction.'When will the August interest rate cut hit my mortgage repayments?
This will be different for each lender.
At the time of writing, Commonwealth Bank (CBA), ANZ, NAB, and Westpac haven't revealed if they will follow in the RBA's footsteps with a 0.25 per cent cut to variable rates.
If they do pass on the rate cut, the major banks' decisions usually kick in 10 to 14 days after the RBA meeting.
Some smaller lenders can act much faster.
For example, Athena Home Loans passed on a same-day rate cut following May's interest rate cut announcement.
Athena has also passed on the August rate decision to its customers, with the new best variable rate being 5.64 per cent.
Ben Perham, head of personal banking at Macquarie Bank, said it was essential to pass on the rate cut as quickly as possible.
'When the RBA last cut the cash rate in May, we proved that the savings could be passed on to homeowners in just three days, instead of the industry average of 12 days," he said.
"We were the fastest of the major banks and homeowners loved it, so we're doing it again."
What does a third rate cut mean for homeowners?
If you have a $600,000 mortgage with 25 years remaining, this 0.25 per cent rate cut will save you roughly $74 per month.
When you combine this cut with the ones in February and May, homeowners will be pocketing around $272 per month, or $3,264 per year.
Those monthly savings jump up to $453 per month for someone with a home loan of $1 million, and yearly savings of $5,436.
Ahead of the August decision, Canstar estimated the new average variable rate for owner-occupier loans would be 5.54 per cent.
It added that 5.34 per cent would be the lowest Big Four bank variable rate, and 5.25 per cent and under would be considered an ultra-competitive variable rate.Sign in to access your portfolio
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