At its board meeting on 2 May the Reserve Bank of Australia (RBA) announced a cut in the Official Cash Rate of 0.25% from 2.0% to a record low of 1.75%.
Bank Australia has now carefully reviewed its interest rates as well as how the market is choosing to price both retail loans and deposits.
As a result of our review the Standard Variable Home Loan interest rate will fall to a record low 4.99% on 23 May 2016.
Details on our full range of other loan rates will be available on our website by Friday 13 May. Deposit interest rates will be available on our website by Monday 23 May.
The changes we have made ensure our interest rates remain highly competitive. They also ensure we achieve the right balance between the revenue we generate from our lending products and the interest we pay to customers for their deposits. As a customer owned bank it’s important we treat all customers fairly.
Over the past year Bank Australia has kept its Standard Variable Rate on hold despite the fact that all four of the major banks and some smaller banks have increased theirs outside of the Reserve Bank decision to cut rates. As a result of our decision we have maintained our competitiveness in the market over the long term.
Since 2003 the bank has commissioned Canstar to conduct an independent valuation of the benefit of our competitive pricing provided to all customers compared to the average of the four major banks. The valuation for the year to 31 December 2015 calculated a benefit to our customers of $25.1 million, or an average of $203 per customer.
In recent times a greater proportion of this benefit has flowed to borrowing customers and this has in part informed our decision to reduce our standard variable home loan rate by 10bps on this occasion. The following table illustrates the competitiveness of Bank Australia’s Standard Variable Home Loan compared to its major competitors.
Standard Variable Home Loan Rates
Following response to RBA rate cut on 2 May
|Commonwealth Bank of Australia||5.35%|
|Bank of Queensland||5.61%|
* Existing loans effective 23 May 2016; new loans effective 13 May 2016.