SYDNEY, Australia – Australia’s big four banks responded to the latest official cash rate cut from the Reserve Bank on Thursday.
One day following the inter-meeting decision of the Reserve Bank to cut the official interest rate cut at its lowest sufficient level, NAB, CommBank, ANZ, and Westpac responded. The four of the biggest lenders in the country published their plans to cater to the recent rate cut. With the increasing fears over the Covid-19 pandemic negatively impacting the economy, the four Australian banks announced that they would provide support to customers.
The support packages that the lenders will offer their members hope to increase the cash flow of Australian households and businesses during this period. The plans from the four Australian banks are also proof of them recognizing the grave risks that the virus outbreak may bring to the country’s economy.
The Commonwealth Bank is among the early lenders to announce its plans to decrease the variable rates in their packages. For home loans with a fixed period of one, two, or three years, CommBank will reduce 0.70% from its current rates. There is also a 1% rate cut for business loans and another 1% reduction for all their existing small business loans.
CommBank will also offer a 0.60% rate increase for their term deposits for 12 months to 1.70% p.a. The bank will also provide customers with an option to concede repayments of their car loans and equipment finance loans.
The RBA announced to drop the official interest rate at its lowest at 0.25%. Only a few minutes following the official notice, CommBank also released the changes for its financial products offered to both households and businesses.
The most notable change from the big lender is the surprise rate cut for its fixed home loans. The 0.70% decrease will apply to all its customers, both on existing and new loan applications.
According to Matt Comyn, the CEO of Commonwealth Bank, their market position shows that the lender focuses on extending aid to all parts of the economy during the health crisis.
Mr Comyn said that they particularly want to make sure that the bank services can help small businesses to stay open and keep their workers employed. He also stated that they are doing everything to provide support to older Australians and other households.
As of April 3, CommBank will start to offer the 1% reduction in their business loan rates to aid businesses in keeping their operations. The lender will also allow customers for deferred repayments on their vehicle loans and equipment financing.
Businesses primarily affected by the crisis can also get waivers on redraw fees, merchant terminal fees, establishment fees, excess interest, and more.
The National Australia Bank was also among the early responders to the recent RBA rate cut. Among the changes, the lender will offer to members are an option to pay repayments for home loans up to six months and 0.60% rate reduction to fixed home loans. They will also provide bargains on all overdrafts and new investments by 2% and another 1% for small business loans in variable rates. NAB will also offer options for their customers to defer repayments for business loans for six months maximum and business credit cards.
One day following the announcement from the RBA, NAB published its host if changes for its product collections. Effective March 24, the lender will start rolling out its 1.75% p.a. 10-month term deposit rates. However, the product will only be available to NAB’s personal-loan customers but pose to offer a level of relief to affected savers because of plummeting prices.
According to Ross McEwan, the CEO of NAB, the measures they are willing to take after the RBA rate cut will offer a significant amount of relief to homebuyers and businesses alike. He further stated that companies, in particular, will need all the help during this unprecedented situation, and they have a range of products to offer. Mr McEwan also said that the support from their new products would provide cash flow relief to keep businesses open and jobs continually available.
ANZ also unleashed a few changes to its financial products. That includes rate reductions to its small business loans with variable interest at 0.25% and another 0.25% for its variable home loans. The lender will also introduce fixed-rate home loans in 2 years with a 2.19% p.a.
The big bank will also provide options to its customers to defer repayments for their loans for three to six months. ANZ will also offer an interim rise in 12 months overdraft facilities.
According to Shayne Elliot, the chief executive of ANZ, the bank’s decision following the RBA rate cut hopes to provide ease to Australian businesses and households. Their reductions to small business loan rates and variable home loan rates, in particular, aim to help their self-employed savers and borrowers. Also, ANZ will offer additional aid to business through its deferral option on loan repayments up to six months.
Meanwhile, Westpac also released a host of changes on their loan rates after the recent official cash rate cut. The lender will introduce a 2.29% p.a. on its one, two, and three years fixed-rate home loans effective on March 27.
They will also offer a deferral option for mortgage repayments up to three to six months. It will be available for their customers who went unemployed due to the spreading virus. Westpac will also introduce its 1.70% p.a. 12-month term deposit rate and a 2% p.a. 8-month term deposits for 65 years old Australians and older.
Among the changes that Westpac will impose is a 1% rate reduction on cash-based small business loans with variable interest rates. Their existing and new business clients will also get a 2% rate reduction.
According to Peter King, the acting chief executive of the Westpac Group, the decision of the bank is a united response with the regulators, federal government, and corporate Australia.
The bank also stated that their will provide relief to Australians who are financially suffering due to the virus outbreak. However, the lender noted that it would not slash its variable rates.
After the RBA rate cut announcement on Thursday, four of the biggest banks in Australia responded immediately. And while ANZ was the last to publish its changes after the official cash rate cut, it noted that the support package it will provide would extend to their variable customers.