SuperUser posted on October 03, 2012 13:35
Big banks in little hurry to pass on rate cut
Author: Chris Zappone
Date: October 3, 2012 - 1:12PM
The big four banks will pass along most of the Reserve Bank's rate cut to mortgage holders, analysts believe - but the wait may drag on until next week.
The major banks took an average of 10.6 days to pass along rate cuts following RBA reductions beginning in November 2011, according to calculations from Fairfax.
This time around, analysts believe the banks could wait until next Friday, October 12, when ANZ bank, pursuing its go-it-alone rate announcement strategy, is expected to reveal any changes to its mortgage rates.
"Somewhere between now and then is the window," said Commonwealth Bank financial services equities analyst Ben Zucker. But with ANZ's decision the only hard date out there "it's an obvious one to focus on," said Mr Zucker.
The only bank to respond to the RBA's 25 basis points cut to the cash rate was Bank of Queensland. BoQ said yesterday it would trim 20 basis points from its standard variable rate, taking it to 6.71 per cent.
As of this morning, Commonwealth Bank, National Australia Bank and Westpac said their rates remained under review. When the banks do lower rates, though, Mr Zucker anticipates that they will cut about 20 basis points from mortgages.
"Holding a bit back like Bank of Queensland did wouldn't be surprising," said Mr Zucker, but anything more "aggressive" would be surprising given the funding environment.
After the RBA cut 75 basis points from the cash rate in May and June, lenders chopped their standard variable home loan rates by an average of 53 basis points, according to data from financial comparison site RateCity.
Bell Potter Securities bank equities analyst TS Lim said this time the banks would likely cut about 20 basis points from their mortgage rates.
"It's all about preserving margin," he said. "They are going to follow BoQ's lead and withhold probably five basis points."
Mr Lim said that if banks cut 20 basis points from mortgage rates but dropped a full 25 basis points on savings products, the RBA rate reduction would be neutral for most of the major banks' margins.