Full rate cut was worth $3.34 billion in potential stimulus

The Today show money correspondent Ross Greenwood advised the full 25% rate cut savings was worth $3.34 billion in potential stimulus – money back in the economy.

But not all banks are passing on the full cash rate cut.

With some $1.33 trillion in home owner and investor home loans, Greenwood calculated that on all banks passing the rate cut on in full.

However the Commonwealth Bank is only passing on part of Tuesday’s cut in official rates to its home loan customers, but has interestingly also taken the step of raising some deposit interest rates.

The country’s biggest bank has lowered its standard variable mortgage rates by 0.20 percentage points to 5.45%.

CBA’s group executive for retail banking, Matt Comyn, said the bank had considered the needs of deposit customers as well as borrowers in its decision.

“Lifting the rates for our deposit customers at a time when the cash rate is decreasing recognises the importance of savings income, particularly for retirees and young people.”

The CBA move comes after ANZ earlier said it would lower its standard variable home loan rate by 0.25 percentage points to 5.38%, effective Friday.

NAB has copied Commonwealth Bank’s move to keep some of the Reserve Bank’s 0.25 per cent cut to the cash rate.

NAB will cut its standard variable rate to 5.43 per cent, with its lowest fixed rate at 4.49 per cent for one year and 4.59 per cent for five years.

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Australian Banks rebuked over home loan rate cuts

Some of Australia’s biggest banks are under attack for failing to pass on in full to home loan customers the Reserve Bank’s interest rate cut.

Only one of the nation’s big four banks, ANZ, has followed the RBA’s lead and cut standard variable home loan rates by 25 basis points.

ANZ’s rivals, the Commonwealth Bank and National Australia Bank, held back and trimmed their rates by just 20 basis points.

Westpac has yet to announce whether it will adjust its home loans after the RBA sliced its cash rate to a record low of two per cent on Tuesday.

Treasurer Joe Hockey said he will be “very angry” if the nation’s banks don’t pass on the RBA’s rate cut in full.

“The banks are making very good profit and we need our banks to be profitable,” he told reporters on Wednesday.

“But when the Reserve Bank acts, we expect the banks to also act in full as well.”

ANZ lowered its standard variable rate to 5.38 per cent shortly after the RBA cut.

But CBA and NAB failed to follow suit, with their standard variable rates falling to 5.45 per cent and 5.43 per cent, respectively.

CBA also lifted interest rates for two key savings accounts in an attempt to help young people and retirees who have seen the money they make from term deposits fall in line with RBA rate cuts in recent years.

But the bank came under fire from consumer watchdog Choice, which branded as “cynical” its decision not to pass on the full RBA rate cut.

“While we welcome the bank’s decision to raise some deposit interest rates, CBA is hardly on struggle street, and its mortgage customers deserve better,” Choice campaigns and communications director Matt Levey said.

“CBA has plenty of capacity to compete for deposit customers, especially young savers, without engaging in spin and playing them off against mortgage holders.”

Retirees relying on fixed income investments, such as bank term deposits, have come under pressure since the RBA began its latest rate cutting cycle in late 2011.

Since October 2011, the RBA’s cash rate has fallen from 4.75 per cent.

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