Brighter And some

Banks asked to please explain interest rates

by Kate Watt, Marketing Manager 12 October 2016

The heads of Australia’s biggest banks have been hauled before a government panel and asked to ‘please explain’ on a range of fronts including stuff ups with insurance claims and financial advice.

It’s all part of the House of Representatives economics committee’s banking review, and it’s provided a chance to ask the question on many mortgage holders’ lips: why don’t the banks always pass on the full interest rate cuts from the Reserve Bank?

Here’s how Commonwealth Bank chief Ian Narev explained the bank’s penchant for partial rate cuts:

“The Reserve Bank cash rate is an important benchmark but a large number of funding costs exist irrespective of that benchmark. If we were to provide such a product, we would need to take into account all potential factors on the costs of funds,” he said.

Sounds like a partial answer to us.

The good news for mortgage holders is there are plenty of other lenders who are offering competitive home loan interest rates so it pays to shop around when you’re ready to buy your dream home.

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