8 Dec 2011

Customers advised to move their mortgages

10:16 am on 8 December 2011

Australian Federal Treasurer Wayne Swan is urging people to take their home loans from the big four banks and move them to smaller lenders with lower interest rates.

None of the big banks - the ANZ, Westpac, NAB or the Commonwealth - have moved their rates since the Reserve Bank lowered the official cash rate to 4.25% on Tuesday. It was the second cut in two months.

Only Bank of Queensland, Members Equity and the NSW Police Credit Union have announced they will do so.

The ABC reports the lower OCR should mean savings of about $A50 per month on a $A300,000 mortgage, if it is passed on to borrowers.

Mr Swan said customers and businesses will be very angry if banks fail to pass through the rate cut in full.

He also suggested borrowers go to credit unions or other financial institutions "that are more competitive".

Mr Swan said the big four are "among the most profitable banks in the world".

''That's one of the reasons we worked so hard to abolish mortgage exit fees on new loans," he said.

''Customers and businesses will have a very dim view of the banks if they fail to pass through this rate cut in full.''

But the Australian Bankers Association says the banks have several things to weigh up.

''On the one hand they know that if they don't pass on the rate cuts in full it's going to be very unpopular with customers,'' said chief executive Steve Munchenburg.

''On the other hand the cost of money has gone up.''

Explaining the reasons for the rate cut, RBA Governor Glenn Stevens said turbulent financial markets, tough financing conditions and cautious behaviour by businesses and households meant global growth was likely to keep slowing.