Westpac delays passing on rate cut
Westpac home loan customers will not benefit from last week's interest rate cut for another week, as the bank takes longer than its peers to pass on the latest reduction in borrowing costs.
While the big banks have all announced they will pass on the latest rate cut to borrowers, and ANZ will pass on a slightly larger amount, mortgage customers of the majors do not start paying less interest until the cuts take actually effect.
In a move that is estimated to make the biggest banks an extra $2 million a day, lenders generally drag their feet in applying interest rate cuts to mortgage accounts, often taking a week or more.
The Commonwealth Bank and National Australia Bank have been the quickest of the majors to pass on the latest cut. Both will pass on the 0.25 percentage point cut to borrowers, with the reductions taking effect this Monday.
NAB CEO Cameron Clyne signalled the bank may cut interest rates independently of the Reserve Bank.
ANZ customers, who are receiving a 0.27 percentage point cut, will start paying less interest on Friday.
Westpac's cut, also of 0.25 percentage points, will not take effect until next Monday, almost two weeks after the bank announced its decision. Westpac is likely to net roughly $2 million a day until the cut is passed through.
A spokesman for Westpac said: "Our decisions are based on providing certainty to our customers who know clearly when their monthly repayment amounts will change."
Its Bank of Melbourne customers will receive the cut slightly earlier, on Friday, while St George customers will receive the cut on Monday, May 20.
Borrowers receive some benefit from banks' delays in passing on rate changes when rates are rising.
BusinessDay analysis last year found banks on average took more than 10 days to pass on cuts in the cash rate to customers, but less than seven days to pass on rate rises.