Lenders under scrutiny over delayed rate cut response

Dozens of institutions yet to follow RBA's May reduction

Lenders under scrutiny over delayed rate cut response

Nearly a week after the Reserve Bank of Australia (RBA) slashed the official cash rate by 0.25 percentage points, 19 lenders have yet to announce whether they will pass the savings on to mortgage holders. The delay has raised concerns among consumer advocates and financial experts, especially as the country continues to grapple with the rising cost of living. 

While many lenders responded within hours of the RBA’s 20 May decision - the second rate cut of the year - a group of mostly smaller institutions remains silent on their plans. In contrast, major players such as Commonwealth Bank, ANZ, NAB, and Westpac have committed to passing on the cut in full, though not immediately. 

According to Finder, the Big Four banks, which hold around $1.13 trillion in household debt, stand to earn approximately $7.6 million for each day they delay applying the cut. Collectively, that could amount to $76 million over a 10-day window before rate relief reaches customer accounts. Westpac has announced the latest effective date, June 6. 

“Of course, the banks aren’t setting rates to be generous. They’re responding to their own funding costs,” said Finder home loan expert Richard Whitten. “That is, their costs for borrowing money to fund customers’ loans and other business.” 

The following lenders have not yet confirmed whether they will reduce mortgage rates as of the time of writing: 

  • Bank of China 
  • BankWAW 
  • Broken Hill Bank 
  • Cairns Bank 
  • Dnister 
  • Family First Credit Union 
  • First Option Bank 
  • Freedom Lend 
  • La Trobe 
  • Laboratories Credit Union 
  • Reduce 
  • South West Slopes Bank 
  • The Capricornian 
  • The Mac 
  • Transport Mutual Credit Union 
  • Warwick Credit Union 
  • Well Money 
  • Woolworths Team Bank 
  • Yard 

Canstar’s data insights director Sally Tindall urged customers to consider refinancing if their lender remains unresponsive. 

“Banks know better than most just how tough it has been for these customers over the last couple of years,” Tindall told Yahoo Finance. “If you’re on a variable rate, it’s your right to pick up your mortgage and take it to a lender willing to offer you a better deal.” 

Some non-major lenders, such as Athena and Unloan, passed on the RBA cut on the same day it was announced, offering immediate mortgage relief to borrowers. Macquarie led the charge among the majors, moving on May 23. 

Potential savings for borrowers 

For a typical $600,000 loan over 25 years, a 0.25 percentage point reduction could translate to a $91 monthly saving. Jessie Boyce, director of Nexus Loans, said the latest cut presents an opportunity to accelerate repayments for those who can afford it. 

“With interest rates dropping, it’s a great opportunity to get ahead without stretching the household budget—especially if repayments were already comfortably manageable,” she said. 

Boyce explained that a borrower with an $800,000 loan at 6% interest over 30 years could save roughly $130 per month by adjusting their repayments. However, by maintaining the higher pre-cut repayment level, the borrower could potentially shave nearly two years off their loan term and save more than $70,000 in interest. 

What are your thoughts on how this will impact borrowers and the mortgage market in the coming months? Share your insights below.