By Jonathan Chancellor
Every day that the big four banks delay passing on the Reserve Bank’s latest interest rate cut represents a deprivation of $12 million from home owners’ pockets, according to The Australia Institute.
NAB and the Commonwealth Bank have announced their response to the RBA lowering the cash rate by 0.5 percentage points yesterday. NAB will cut its rates by 0.32 percentage points. The Commonwealth Bank will cut its rates by 0.4 percentage points.
The Australia Institute derived the $12 million figure from the $1.1 trillion in total housing loans held by the big four.
It then calculated the difference 50 basis points makes in the banks' combined revenue for one day.
The institute assumed only 80% of the mortgage market was in standard variable rates, senior research fellow David Richardson told Fairfax Media.
“The big four banks have more than an 80% market share. If they are not prepared to pass on interest rate cuts in full then perhaps it’s time to start discussing a banks super profits tax again,” Richardson said.
“The banks are engaging in a phoney debate about the cost of borrowing,’’ he concluded.
In order for the domestic economy to fully benefit, the Federal Treasurer, the housing industry lobby and consumer groups have called on the banks to pass along the full rate cut.
This article first appeared on PropertyObserver.com.au. How much is your city worth this Autumn? Get your free Property Observer ebook here to find out.
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