Interest rates at historic low
The Reserve Bank has cut rates to a new low of 1%
Three of the big four banks will hold back a full interest rate cut for homeowners
Alex DrucePerthNow
BankingHousing MarketPropertyEconomyWA NewsAustralia
ANZ has become the only big four bank to reduce variable mortgage rates in full following the Reserve Bank's cash rate cut, while rivals Commonwealth Bank, NAB and Westpac will be passing on only part of the amount this time.
ANZ was widely criticised last month when it passed on just 0.18 percentage points of the RBA's 25 basis point cut, but on Tuesday said it would reduce its variable rates for owner-occupier and investor loans in full from July 12 after the cash rate was cut from 1.25 to one per cent.
"We looked at a number of factors before reaching this decision, including business performance, market conditions and the impact on our customers," ANZ retail boss Mark Hand said.
Commonwealth Bank said it would only be passing on a 0.19 per cent cut for principal and interest standard variable rate home loans, but the entire 0.25 per cent cut on interest-only home loans.
The bank, which was the first to pass on last month's cut in full, on Tuesday said it was introducing a special five-month term deposit rate of 2.20 per cent for savers — a 0.20 basis point increase — in a "deliberate choice to limit the interest rate reduction on the most popular savings account".
Rival NAB also decided against passing the entire rate cut, announcing it would reduce all variable rate home loans by 0.19 per cent.
NAB's chief customer officer for consumer banking Mike Baird said: "In making this decision, we have also considered our customers who rely on income from deposits."
Westpac said it would reduce all variable home loans rates by 0.20 per cent, except for interest-only investor loans, for which it would cut rates by 0.30 per cent.
"It's critical that we continue to carefully manage our business in a sustainable way for the longer term and take into account the diverse needs of all our stakeholders," Westpac Consumer chief executive David Lindberg said in a statement.
Meanwhile, Finance Minister Mathias Cormann insists the Federal Government is "kicking in the same direction" as the central bank in trying to shore up the economy.
But RBA Governor Philip Lowe also stressed easier monetary policy was not the only way to drive the economy and, pointedly, highlighted the steps the Government could take.
Millions of Australians are on track to receive a tax cut after legislation for Scott Morrison's $160 billion package passed through the lower House
"One option is fiscal support, including through spending on infrastructure," Mr Lowe said in a speech hours after the rate cut.
"Another option is structural policies that support firms expanding, investing, innovating and employing people. A strong, dynamic, competitive business sector generates jobs."
Senator Cormann said the Government was on the RBA's wavelength.
"We are kicking in the same direction as the Reserve Bank, to ensure that we continue to build a stronger economy and can continue to create more jobs," he told Sky News on Wednesday.
The Minister pointed to the Government's growth policies including its ambitious free-trade agenda and flagship $158 billion tax cuts package.
The Australian economy faces global headwinds and local challenges, including the impact of the drought and flooding, soft consumer spending and rising unemployment.
Labor shadow treasurer Jim Chalmers argues the Government isn't doing enough and the RBA rate cuts prove it.
"We need the Government to recognise that the economy is floundering and middle Australia is struggling," he said.
"And we need a Government which is actually prepared to do something about it."