Latest news with #bigfourbanks
Yahoo
24-05-2025
- Business
- Yahoo
Simple reason Aussies cop $76m mortgage hit
Australian mortgage holders will give the major banks $76m in additional payments due to the 10 days it takes for them to pass on a rate cut. New figures released by Finder shows the big four banks hold approximately $1.13 trillion in household debt, with a 25 basis point cut earning roughly $7.6m a day on the debt. This means, the 10-day delay on average it takes for the banks to pass on an interest-rate cut will cost households $76m. Finder home loan expert Richard Whitten said even with the 10-day delay, the major banks were so far passing on the rate cut, something they had not always historically done. 'Of course, the banks aren't setting rates to be generous. They're responding to their own funding costs,' he said. 'That is, their costs for borrowing money to fund customers' loans and other business.' 'And how much profit they think they can get on top of that. The cost and profit calculations of each institution are going to look a little different.' The Reserve Bank of Australia (RBA) announced on Tuesday, May 20 that it was cutting the official cash rate by 25 basis points to 3.85 per cent. It follows a fall in Australia's headline inflation rate to 2.4 per cent in the March quarter, while the all-important trimmed mean inflation rate – which removes volatile components such as electricity and fuel costs – came in at 2.9 per cent. Either rate falls within the RBA's inflation target rate of 2 to 3 per cent. How much will Aussies save? How much Aussies will save after the rate cut will depend on the size of their mortgages. Those with a $500,00 debt will save about $76 a month, while those with a $750,000 mortgage are tipped to be $114 better off and Aussies who borrowed $1m will save about $152 a month. Finder head of consumer research Graham Cooke said more than one in two homeowners didn't even know their own rate. 'Mortgage repayments have a huge effect on the monthly cash flow of Australian households, yet more than half are unaware how much they could be overpaying each month,' he said. 'With two rate cuts in three months, the average homeowner could be saving thousands.' He said the average borrower stood to save about $213 per month – $2553 annually – thanks to the interest rate cuts in February and May. Mr Cooke said loyalty to your lender could be expensive. 'Banks rarely reward complacency, so reviewing your mortgage once a year should be as routine as your tax return,' he said. When will a rate cut be passed through? Within 24 hours of the RBA announcing a rate cut, 30 lenders said they were passing on the full rate cut. This included all four major banks that within 30 minutes of the announcement informed customers that the rate cut would be passed on. NAB confirmed it would decrease its standard variable home loan interest rate by 0.25 per cent, effective from Friday, May 30, with the 10-day delay in line with previous changes to interest rates in the wake of a cash rate change. ANZ followed, saying it would also be dropping its variable rate by 0.25 per cent, effective on May 30. Commonwealth Bank of Australia has moved in line with the other majors and will also drop variable interest rates on home loans by 0.25 per cent. Westpac told customers it too would pass on the rate cut in full to mortgage holders and savers, albeit a touch slower. Westpac explained to NewsWire it is faster to move on savings rates compared with mortgages due to the complexity of the different products. Savings rates are applied universally to every customer, while mortgage holders have differing rates depending on their circumstances. It was the only one of the major banks to make an announcement on savings rates. From June 3, the bank will decrease its variable interest rates by 0.25 per cent for new and existing customers. Bendigo Bank says it will reduce the cash rate in line with the majors from June 6. Australia's fifth largest bank, Macquarie, passed on the rate cut on Friday. Error while retrieving data Sign in to access your portfolio Error while retrieving data
News.com.au
24-05-2025
- Business
- News.com.au
Mortgage holders tipped to pay their bank millions in additional payments
Australian mortgage holders will give the major banks $76m in additional payments due to the 10 days it takes for them to pass on a rate cut. New figures released by Finder shows the big four banks hold approximately $1.13 trillion in household debt, with a 25 basis point cut earning roughly $7.6m a day on the debt. This means, the 10-day delay on average it takes for the banks to pass on an interest-rate cut will cost households $76m. Finder home loan expert Richard Whitten said even with the 10-day delay, the major banks were so far passing on the rate cut, something they had not always historically done. 'Of course, the banks aren't setting rates to be generous. They're responding to their own funding costs,' he said. 'That is, their costs for borrowing money to fund customers' loans and other business.' 'And how much profit they think they can get on top of that. The cost and profit calculations of each institution are going to look a little different.' The Reserve Bank of Australia (RBA) announced on Tuesday, May 20 that it was cutting the official cash rate by 25 basis points to 3.85 per cent. It follows a fall in Australia's headline inflation rate to 2.4 per cent in the March quarter, while the all-important trimmed mean inflation rate – which removes volatile components such as electricity and fuel costs – came in at 2.9 per cent. Either rate falls within the RBA's inflation target rate of 2 to 3 per cent. How much will Aussies save? How much Aussies will save after the rate cut will depend on the size of their mortgages. Those with a $500,00 debt will save about $76 a month, while those with a $750,000 mortgage are tipped to be $114 better off and Aussies who borrowed $1m will save about $152 a month. Finder head of consumer research Graham Cooke said more than one in two homeowners didn't even know their own rate. 'Mortgage repayments have a huge effect on the monthly cash flow of Australian households, yet more than half are unaware how much they could be overpaying each month,' he said. 'With two rate cuts in three months, the average homeowner could be saving thousands.' He said the average borrower stood to save about $213 per month – $2553 annually – thanks to the interest rate cuts in February and May. Mr Cooke said loyalty to your lender could be expensive. 'Banks rarely reward complacency, so reviewing your mortgage once a year should be as routine as your tax return,' he said. When will a rate cut be passed through? Within 24 hours of the RBA announcing a rate cut, 30 lenders said they were passing on the full rate cut. This included all four major banks that within 30 minutes of the announcement informed customers that the rate cut would be passed on. NAB confirmed it would decrease its standard variable home loan interest rate by 0.25 per cent, effective from Friday, May 30, with the 10-day delay in line with previous changes to interest rates in the wake of a cash rate change. ANZ followed, saying it would also be dropping its variable rate by 0.25 per cent, effective on May 30. Commonwealth Bank of Australia has moved in line with the other majors and will also drop variable interest rates on home loans by 0.25 per cent. Westpac told customers it too would pass on the rate cut in full to mortgage holders and savers, albeit a touch slower. Westpac explained to NewsWire it is faster to move on savings rates compared with mortgages due to the complexity of the different products. Savings rates are applied universally to every customer, while mortgage holders have differing rates depending on their circumstances. It was the only one of the major banks to make an announcement on savings rates. From June 3, the bank will decrease its variable interest rates by 0.25 per cent for new and existing customers. Bendigo Bank says it will reduce the cash rate in line with the majors from June 6. Australia's fifth largest bank, Macquarie, passed on the rate cut on Friday.
News.com.au
21-05-2025
- Business
- News.com.au
RBA rate cut: Aussies warned over costly banking ‘blind spot'
They've just been delivered an interest-rate cut but many Aussies won't reap the benefits because of growing financial complacency that's left most people stuck with banks that give them a lacklustre deal. Alarming polling revealed most borrowers didn't know what interest rates they were paying on their loans, indicating they were not up to speed on whether they were getting a good deal. The majority of Aussie adults were also banking with the same account they joined as children – even when higher interest earning options were available. It comes as the Reserve Bank of Australia announced another 0.25 per cent cut to the cash rate on Tuesday, a move that the big four banks have since announced they will pass to borrowers and savers in full. The official cash rate has now dropped from 4.1 per cent to 3.85 per cent. The Finder survey laid bare the costly reality of banking complacency, revealing 51 per cent of Aussie adults polled were still using their first bank account as their primary repository for savings. That loyalty is now costing cold, hard cash. Finder personal finance expert Sarah Megginson said Aussies' loyalty to their childhood banks was being rewarded with subpar interest rates and a financial kick in the teeth. 'You might think your existing bank is 'good enough', but if you're not earning interest, it's your bank balance that is missing out,' Ms Megginson said. Such banking inertia wasn't simply hurting savings. A shocking number of homeowners admitted they didn't even know what interest rate they were paying on their mortgages – their single biggest household expense. An additional Finder survey found just 37 per cent of mortgage holders could name their interest rate. This suggested up to 63 per cent of homeowners were paying off home loans without knowing how much they were paying in interest – potentially costing families thousands in missed refinancing opportunities. Ms Megginson warned that blindly trusting your bank to pass on rate savings was a mistake. 'Mortgage repayments are often a family's biggest monthly expense, and not knowing your rate is like driving blind on your financial journey,' she said. 'Knowing your rate is absolutely crucial. There's money on the table to be saved by renegotiating with your lender or shopping around for a better deal, and that starts with knowing your rate.' There was something of a gender divide when it came to rates: 30 per cent of female mortgage holders knew their interest rate, compared to 45 per cent of men. There was also a divide, albeit smaller, when it came to banking loyalty to savings accounts opened as teens. About 55 per cent of women continued to bank with their first account, compared to 47 per cent of men. 'Many people stick with the same bank for years, as the idea of switching seems like a massive hassle,' Ms Megginson said. 'It's really a lot quicker and more straightforward than you think.'
