by: Phil Jacob From: The Daily Telegraph May 04, 2012 12:00AM
MORE than 30,000 Australians will remain under serious mortgage stress after two of the Big Four banks failed to pass on the Reserve Bank's 50 basis point interest rate cut to customers.
The Commonwealth Bank yesterday joined rival NAB in cutting interest rates, but also by less than the Reserve Bank's move on Tuesday.
The Commonwealth cut its standard variable rate by 0.40 per cent, bringing its new rate to 7.01 per cent.
The cut brings the bank in line with NAB, who reduced rates by 32 basis points to 6.99 per cent on Wednesday.
"In making this decision, the group has continued to balance the interests of its 1.8 million home loan borrowers with those of its 11 million depositors and those of its shareholders," Commonwealth spokesman Steve Batten said.
Market research institute Roy Morgan has calculated 64,000 Australians would no longer be "at serious risk of being unable to repay their mortgages" if the four majors passed on the rate cut in full.
But, with minor lenders Bank of Queensland and CUA joining the Commonwealth and NAB in cutting rates by less than the Reserve Bank, it left tens of thousands still under mortgage stress.
Mortgage stress is defined as having to outlay at least 30 per cent of income on mortgage repayments.
"It's quite remarkable to see those 10 basis points not passed on by some of the bigger lenders can mean that much for so many mortgage holders," Roy Morgan's Norman Morris said.
"There are still nearly 800,000 Australians under mortgage stress so it's quite obvious every decision they make hugely impacts mortgage holders."
Westpac boss Gail Kelly refused to comment on rates, insisting the day was devoted to the company's half-yearly results. Westpac's cash profit, the bank's preferred measure of performance, was $3.195 billion, 1 per cent higher than the $3.17 billion in the previous corresponding period.
"I'm amazed at how people pay so much attention to that SVR (standard variable rate) rate, because we all know that very few people actually pay the SVR rate," Ms Kelly said.
But she hinted a cut to Westpac's interest rates later today would not match the 0.5 per cent made by the Reserve Bank on Tuesday.
"It has been a tough time over this past six months with managing higher cost of fund pressures," she said.
"I have to say the margin pressures have become a bit stronger in the second half of this half, the second quarter."