Homeowners ready to walk over rates

NAB, CBA and Westpac have cut their standard variable home loan rates by 20 pts of the RBA's 25 basis pt cut

A majority of home-loan customers say they will look for a new lender after Westpac, NAB and Commonwealth Bank failed to pass on all of Tuesday's interest rate cut. Picture: John Donegan Source: News Limited

TWO-thirds of home-loan customers say they will shop around for a new lender after three of the four big banks decided to hold back some of Tuesday's RBA reduction.

A News Limited survey of more than 1100 variable home-loan customers reveals 64 per cent would consider switching if their provider didn't pass through the 0.25 per cent RBA cut in full.

The survey result emerged yesterday after the Commonwealth Bank, Westpac and National Australia Bank announced they would reduce their standard variable rates (SVR) by a uniform 0.2 per cent.

The trio said it was a tough decision as they tried to balance the demand of millions of savers against that of homeowners and pointed to high deposit costs and elevated funding levels as justification for their separate decisions.

Since the RBA rate-cutting cycle began in November last year, the big banks have pocketed $214 million by withholding on average 39 basis points from the 175 in official cuts.

Increasing unhappiness with banks' refusal to pass on RBA moves in full has caused a surge in switching.

Almost 186,000 homeowners voted with their feet and moved mortgage provider in the 12 months to September - an increase of 26 per cent on the same period two years before.

And almost 1 million additional exit-free loans have been written since the government changed the legislation to make it easier for customers to switch mortgage providers.

Australian Bankers Association chief executive Steven Munchenberg said this underlined the competition in the sector.

"Typically about one-third of mortgages written in any year are refinancing as home owners move bank,'' he said.

"All of the banks are competing hard for both deposit and lending customers in the current environment.''

After 41 months as with the lowest SVR in the market, NAB yesterday refused to confirm is its pledge will remain in place next year.

The one member of the Four Pillars yet to reveal the size of its cut is ANZ. It will do so on Friday, December 14.

Online lender ING Direct is the only operator to commit to pass on the full RBA cut, reducing its variable mortgage rates by 25 basis points from December 24.

The prospect of further interest rate cuts was boosted yesterday with the latest national accounts showing Australia's economic growth was at its lowest level in 18 months as the mining investment boom peters out.
 

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