Bank Pass On Rate Cut? Don’t Get Fooled!

Will Your Bank Truly Pass On Rate Cuts? History Says “Maybe Not!”

Is the RBA cutting interest rates? Many homeowners hope so! But here’s a crucial warning: Don’t expect your bank to fully pass on rate cut savings. Banks often hold back. News headlines even say to “brace for rate cut bombshell” [2]. At EZ Mortgage Broker, we help you understand these changes. Let’s look at what this means for your home loan.

Past Trends: Banks Don’t Always Pass On Rate Cuts Fully

Mozo, a mortgage comparison group, found a clear pattern. Banks are often good with the first rate cut. But for later cuts, they often don’t pass on rate cut benefits completely.

Think back to 2019. Over half of lenders passed on the RBA’s first 25 basis point cut. Just one month later, only 15% did the same. By October, very few lenders (only 9%) chose to pass on rate cut benefits.

A similar trend happened in 2020. This was during the COVID-19 pandemic. The first emergency cut in March was widely passed on. But the second cut hardly changed home loan rates. The final cut in November saw banks hold back even more. Almost a quarter of lenders did not pass on rate cut savings in full. A surprising 43% passed on nothing at all!

Why Banks Limit Passing On Rate Cuts: Profit Protection

Rachel Wastell, a Mozo finance expert, explains it simply [1]. She says banks “tend to be generous early on… but then start holding back as the cycle continues.” This is often “to protect margins.” Banks want to protect their profits. So, while an early cut might help you, later cuts may not fully benefit you. Banks may not fully pass on the rate cut benefits due to this.

Your Bank Might Not Fully Pass On Rate Cuts!

“History suggests that while the first rate cut might bring relief, banks often show more ‘restraint’ with subsequent cuts, prioritizing their own margins over passing on full savings to customers.” [2]. At EZ Mortgage Broker, we keep you updated. Let’s see what this means for your home loan.

– Ez Mortgage Broker

What This Means for Your Home Loan Savings

Many experts believe the RBA will cut rates this July. But past events, and current news, give a clear warning. You need to be proactive. Waiting for your bank to give you savings might disappoint you. You could end up paying more than you should.

This is where EZ Mortgage Broker helps. We understand the mortgage market. We know how bank rules affect your money. We can help you:

• Check your home loan: Is your current rate competitive?
• Find other lenders: Which banks are offering the best rates? Especially if your bank won’t fully pass on rate cut benefits.
• Negotiate for you: Sometimes, just asking about other options can get your bank to offer a better deal.

Don’t let your bank control your savings. Take charge of your home loan today!

Act Now – Contact Us!

Ready to talk about your choices? Want the best rate possible?

Contact EZ Mortgage Broker:

• Phone: 1300 050 099
• Email: [email protected]

We can help you navigate the interest rate landscape. We might save you thousands!