Cash rate cut makes for greedy lenders
Following the cut of the official cash rate to a new low of 1.5 per cent yesterday, many lenders have prioritised profit over customer interest in a move that is disappointing and greedy, according to Mortgage Choice chief executive, John Flavell.
"Against the backdrop of historically low inflation, softening employment and an Australian dollar stubbornly determined to stay above 75c USD, it was only a matter of time before we saw the RBA cut the cash rate," Flavell said.
"At a time when the economy could do with the lift that a cut to the cash rate would provide, it was deeply disappointing to hear some of the nation's largest and most profitable lending institutions announce that only 10 or 13 of the 25 basis point reduction would be passed on to their mortgage customers."
Flavell stated that while some lenders were quick to announce partial rate reductions, it was disappointing when it took longer to implement the cuts at all — often weeks or months.
"While lenders take weeks to pass on any rate cuts to their home loan customers, I wonder how long it takes for the same institutions to reduce the amount of interest they will pay on savings and transaction accounts," he said.
"There is no reason why a lending institution cannot pass on rate reductions to their customers as soon as they are announced."
Flavell noted the continued high degree of market volatility and low levels of consumer confidence, stating that lenders should act in the best interests of their customers, rather than look to make quick profits.
"These lenders are further adding to their swelling bottom lines at the expense of their customers," he said.
"The reality is... this equates to something like $2 billion taken out of the pockets of Australian mortgage holders."
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