The Reserve Bank slashed official interest rates again last week by 25 basis points, or 0.25%, to a low 3.25%, and ... yet again.. the Big 4 banks and other lenders, chose not to pass on the full cut. More for them, less for you. Now .. enough is enough.
"All we want to do is shine a light and show people what the cost, the impact of their bank not actually passing it on actually is." Said Christopher Zinn
Christoper Zinn of Consumer Network, One Big Switch is tomorrow launching a massive Truth in Banking campaign, recruiting 25,000 home buyers to go to war against lenders, especially the big 4, ANZ which charges 6.8% for the Standard variable rate, Westpac 6.71%, Commonwealth 6.6% and NAB 6.58%. As yet none has passed on the full rate cut.
Christopher Zinn's calculated over the past 4 years ..the gap that's accumulated from the banks NOT passing on the full amount to borrowers is from 0.97% with the NAB to 1.10% Westpac. Imagine the savings you could have made!
Truth In Banking's website allows you to calculate the interest rate gap with your mortgage. Elysha and James are about face with the truth - how much they've forfeited on their loan of $325,000 with the ANZ, compared to the RBA's official rate movements.
"Oh my gosh... total interest rate gap is $10,347, that's over four years." Said Elysha
Over ONE year of their loan, Elysha and James have forked out another $623 approximately not getting the full cuts, it's building up to $100 a month, over the past 4 years .. that would amount to a massive $10,347.
"We'd love to have that money a month to spend on groceries." Said James
"It empowers the consumer because you've got actual real figures that you can give the banks." Said Elysha
Peggy Lowrie has a Westpac home loan balance of $162,000. Doing the calculations -
Peggy's been forking out another $154 per month, $4,600 over 4 years by not getting the full interest rate cut.
"I think one big switch is a great idea because it actually makes people think about their home loans but whether it will actually pressure the banks into actually giving everybody a great deal, there's a big question mark." Said Peter Switzer
Peter Switzer founder of Switzer Financial Planning says the banks no longer blame the pressure of global lending conditions - it's higher interest rates they pay on savings account deposits.
"There's a real competition for savers funds and banks are paying alot to get them, so as interest rates come down they have to cut the rate on deposits but its a very competitive environment." Said Peter Switzer
So how do James and Elysha fare when they try their luck with their bank.
"I've got something to fight them with, I've got figures in front of me. I won't just lie down and let them talk their way out of it." Said James
He's now got the ammunition and there's hope - They've promised to call back by tomorrow afternoon.
Christopher Zinn says if you're not satisfied, take action.
"Find out what the gap is costing you, ring your bank and ask them what they're going to do about it and if they're not going to do anything you should look at moving." Said Christopher Zinn