Trending Financial News 3 July

RBA cuts rates and is prepared to cut again

The Reserve Bank of Australia yesterday cut the official cash interest rate by 0.25 percentage points to just 1 per cent, the lowest level of official interest the RBA has ever maintained.

The board of the RBA, in its monetary policy statement accompanying the decision, cited unemployment, low house prices and low GDP growth as key reasons for the cut in rates. The statement also made clear that the RBA is prepared to cut rates again in coming months.

“The board is prepared to adjust rates again if needed to get us closer to full employment …”

The ASX futures market is already trading at price indicating a 22 per cent chance of a cut to 0.75 per cent in August.

ANZ cuts rates

ANZ Bank was the first big bank to act after the RBA announced its rate cut yesterday. ANZ announced that it will decrease all variable interest home loan rates by 0.25 per centage points, effective from next week, Friday 12 July.

ANZ’s variable rate owner occupier (principal and interest) home loan index rate has been adjusted down to 4.93 per cent p.a. from 5.18 per cent p.a.

For standard variable rate loans for owner occupiers paying interest only, ANZ has reduced their index rate to 5.48 per cent pa, from 5.73 per cent pa.

Commonwealth Bank cuts rates

Commonwealth Bank announced late yesterday that it will variable rate home loan rates for owner occupiers and investors paying principal and interest by 0.19 percentage points to 4.93 per cent.

For interest only home loans, Commonwealth Bank is applying the full RBA cut of 0.25 percentage points.

Angus Sullivan from CBA said: “This combination of pricing changes delivers a fair balance of outcomes for both savers and borrowers.”

Athena is the first lender to deliver full RBA cut to borrowers

Online non-bank lender Athena was the first home loan provider in Australia to announce a full 0.25 percentage point rate cut for retail home loan borrowers at 2.31 pm yesterday.

Athena’s variable home loan (for refinancers) rate has come down 0.25 percentage points from 3.34 per cent p.a. to just 3.09 per cent p.a. (comparison rate 3.05 per cent),* effective from yesterday, 2 July 2019.

NAB cuts rates by 0.19%

NAB announced late on Tuesday that it will cut its variable home loan interest rates by 0.19 per cent pa. NAB’s Mike Baird said the reduction could save owner-occupier borrowers on principal and interest loans worth $400,000 about an extra $552 a year.

“This is on top of the 25-basis point reduction last month,” said Mr Baird, “ customers with an average $400,000 loan could save a total of $1296 per year.”

Mr Baird said savings rates would not be cut by more than 0.19 percentage points.

The squeaky wheel gets the oil

Vadim Taube, chief executive of InfoChoice, said lenders are expected to announce cuts to their variable loan rates over the next few days but some will withhold at least some of the RBA rate cut from retail borrowers.

“As rates get lower more banks will be reluctant to pass on the full RBA rate cut but borrowers don’t need to accept the rate offered by their lender.

“The squeaky wheel gets the oil,” said Vadim Taube, “Find a better rate, talk to your lender and you never know, they could very well turn around and offer you a better rate.”

“And if they don’t, switching to a new lender is not as hard as you might think and variable rate loan exit fees are required to be reasonable.”

Commonwealth Bank ordered to apologise

Commonwealth Bank must apologise to a former customer and pay them $15,000 compensation for “non-economic loss” after it repeatedly shared inaccurate and damaging information about the customer to other creditors.

Commonwealth Bank sold the customer’s $3065 overdue credit card debt to a debt collector in 2003 but failed to update records or delete information held about the customer with credit reference agency Veda (now Equifax). CBA shared false information about the customer with other lenders, including telling Pepper Home Loans that the complainant had a credit card with a $7,000 limit and a $3,000 balance.

The Australian Information Commissioner and Privacy Commissioner, Angelene Falk, found that  CBA “interfered with the complainant’s privacy by using and disclosing personal information about the complainant which was inaccurate, out-of date and/or incomplete.”

The commissioner ordered Commonwealth Bank to issue a written apology and pay the complainant $15,000 for non-economic loss.

Commonwealth Bank must also show the commission that it is making changes to how it uses and discloses personal information.