Published: April 06, 2009 - 03:00 PM
Will the banks pass on a rate cut to home owners?
Even if the Reserve Bank cuts interest rates to 3% or 2.75% when it meets on April 7th, home owners probably won’t see any reduction in their monthly mortgage repayments. High funding costs and reducing margins mean the banks and specialist lenders are less likely to pass the rate cut onto people with home loans.
Returning from London Treasurer Wayne Swan asked for banks to pass on as much as they can of any forthcoming interest rate cuts. "We do acknowledge there is a complex set of factors out there, and that funding costs have been bouncing around, but we'd certainly likely to see any official rate cut passed on as soon as possible," he told reporters in Canberra.
This morning Westpac CEO Gail Kelly also confirmed the continued high cost of funding was have an effect on mortgage rates.
The RBA cash rate is already at a 45 year low of 3.25% and many households have taken out new mortgages, a majority borrowing at record low interest rates. If home loans rates were to drop further then the impact to households will be even greater when rates return to more normal historic levels.
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