No guarantee big four banks would pass on RBA rate cuts

But remember, an RBA cash rate cut is just half the story. It’s then up to your bank to pass that on to customers.

And while some relief will be almost certain, banks don’t tend to be quite as good at passing on rate cuts in full, as they are rate hikes.

Over the past decade, there have been 10 RBA rate cuts.

Since 2022, there have been 13 RBA rate hikes and all four banks passed on every single hike in full. And let’s not forget back in 2018, when they hiked rates even though the RBA did not.

Different this time?

Experts don’t expect banks to get stingy with the first rate cut after 13 hikes.

“It would be financial suicide,” Melbourne-based Mortgage Choice brokerage owner David Thurmond said of a lack of bank reaction to a rate cut. “The optics would be terrible.”

He warns it’s the following rate cuts that customers will need to scrutinise.

Mr Thurmond said mortgage holders should not wait to be given better rates, but rather take action themselves.

'Fixed v variable interest rates': youtube.com/mortgagechoice

“If you’re with a big bank there will always be a better deal out there. You just need to constantly review,” he said.

“The cost of switching banks is about $700, so that’s what we assess, when looking at whether it’s worth it for customers to move.”

Let’s ask the banks

We asked the major banks if they would pass on a February rate cut in full. All four were unsurprisingly unable to disclose that information (one pointed out that price signalling is illegal, so fair enough), but they said they would disclose the information to their customers in a timely manner after any RBA announcement.

And a rate cut may not automatically mean smaller repayments for borrowers. Most banks will first talk to their customers to find out whether they want to change their repayment amounts.

This article first appeared on realestate.com.au and has been republished with permission.