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MANY banks have hit customers with a double whammy in 2015 by failing to pass on the two cash rate drops in full and by hiking rates in recent weeks.

New customers are among those benefiting the most from cheap deals with lenders desperate to sign up new business while loyal customers are missing out.

In 2015 there was a 50 basis point fall to the cash rate to two per cent but analysis by financial comparison website RateCity shows on a $300,000 30-year home loan some lenders dropped their standard variable rate by as little as six basis points this year.

Other institutions haven’t been as greedy and have allowed their customers to enjoy 43 basis point falls.

Mortgage Choice spokeswoman Jessica Darnbrough said greedy lenders rarely pass on Reserve Bank cash rate cuts in their entirety.

‘While it would be nice to see Australia’s lenders pass on the rate cuts in full, history shows that few do this,” she said.

‘Quite often lenders will just pass on some of the rate cut to their borrowers and retain the rest, thus improving their margins.’

Among the lenders failing to pass on the full 50 basis point is Suncorp Bank.

Their standard variable rate was 5.99 per cent before the first rate cut in February and it is now 5.7 per cent.

The bank’s executive general manager of customer development Michelle Bagnall said the RBA’s cash rate isn’t the only consideration made when determining rates.

‘Market conditions, the cost of funding and competitive positioning are just a few of the other factors that come into play when setting rates,” she said.

The Australian Prudential and Regulation Authority recently required the big banks to boost their capital reserves, resulting in institutions making out-of-cycle rate increases.

RateCity spokeswoman Sally Tindall said if customers are disgruntled they haven’t enjoyed the full 50 basis point cuts in 2015 they should look to jump lenders.

‘If you think this is unfair you should look at switching to a bank that has the lowest rate for you,” she said.

‘More recently we’ve seen a lot of good deals on the market but they’ve only been for good customers, loyalty is nothing at the moment.’

Ms Tindall advises customers to phone their lender and demand a better deal.

There are both fixed and variable rate loan deals available at less than four per cent.

sophie.elsworth@news.com.au


Posted by Sophie Elsworth – Newcorp Limited Australia on 6th December, 2015