Warning over Big Four banks after RBA cuts interest rate: '$10 million every day'
The key question is whether ANZ, Commonwealth Bank, NAB, and Westpac will pass on the full 0.25 per cent reduction—and how quickly. Collectively, the Big Four hold around $1.5 trillion in owner-occupier loans, according to Finder's analysis of Australian Prudential Regulation Authority (APRA) data.
That enormous mortgage portfolio gives them considerable power over how swiftly they implement (or delay) any rate cut.
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The RBA's previous cutting cycle, from June 2019 to March 2020, saw a total reduction of 125 basis points (bps) across five cuts.
However, the Big Four didn't all follow suit:
ANZ passed on 97 bps (77.6 per cent of the cuts), taking an average of 8.6 days
NAB passed on 84 bps (67.2 per cent), with an average 12-day wait
Westpac passed on 80 bps (64 per cent), averaging a 13-day delay
CBA passed on 82 bps (65.6 per cent), taking an average of 20 days
In stark contrast, throughout the May 2022 to early 2023 rate-hike phase, the Big Four passed on every single basis point of each increase in as little as 10–14 days.
This discrepancy highlights how delaying or withholding parts of a cut can significantly boost the banks' earnings.
If just 28 basis points is held back on $1.5 trillion of mortgages, that equates to over $10 million in additional revenue every day.
Even short delays of a few days can yield millions of dollars in extra interest.
Australian banks have a clear history of quickly passing on rate hikes but moving more slowly when rates fall.
Although other factors—like maintaining savings rates—do play a role, it's evident that each bank's profit margins and funding costs shape how much of an RBA cut is eventually passed on to borrowers.
In 2019 and 2020, the Big Four's reluctance to implement the full extent of RBA cuts meant many variable-rate borrowers missed out on potential savings, even though some exceptionally low fixed rates (under 2.00 per cent for 4-year terms) were available at the time.
Ultimately, every bank has its own balance sheets and profit targets to consider, and they won't lower rates simply out of goodwill.
Headline inflation has fallen to 2.4 per cent, safely within the RBA's 2–3 per cent target range.
Many experts in Finder's RBA Cash Rate Survey had predicted this cut, arguing that keeping rates too high for too long could risk stifling economic activity.
AMP's Shane Oliver believes inflation was easing faster than expected, making a prompt cut critical to prevent a sharper slowdown.
Market Economics managing director and Yahoo Finance contributor Stephen Koukoulas went even further, forecasting six cuts this year to safeguard employment and maintain momentum in the broader economy.For mortgage holders, the potential impact of this latest reduction is significant.
A $640,000 loan could see monthly savings of over $100 if the cut is passed on in full.
Those in pricier markets, like Sydney, could benefit even more.
With inflation now seemingly under control, the RBA is keen to give households and businesses breathing space to keep the economy on track.
With the RBA taking a heavily data-focused stance, the spotlight will remain firmly on upcoming economic indicators—especially inflation figures.
For anyone with a home loan, the crucial question is whether ANZ, CBA, NAB, and Westpac will indeed pass on the 25-basis-point cut swiftly and in full, or if we'll see a repeat of partial reductions.
Now is an ideal time for borrowers to check their rate and weigh up their options.
If your lender doesn't pass on the cut—or drags its feet—it could be worth negotiating for a better deal or exploring refinancing with a competitor.
Lenders do want to retain customers who are prepared to shop around, and even a few basis points can make a substantial difference over the life of your mortgage.
A new era of lower interest rates should ease pressure on households, but whether that relief arrives in full depends on how generously banks respond. If your current lender isn't playing ball, it may well be time to seek out one that will.
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