BOTH the Newcastle Permanent Building Society and Great Bank have announced they will cut their interest rates, but neither will match the Reserve Bank's Tuesday 0.25 per cent cash rate cut.
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The two Hunter financial institutions on Friday confirmed they would pass on roughly half of the RBA cut, which took rates to a record low 0.75 per cent, to their customers. Both argued they had to strike a balance between depositing customers who relied on interest income and borrowers.
Newcastle Permanent will cut its variable interest rate 0.13 per cent from October 22.
Chief executive Bernadette Inglis said the financial institution had carefully weighed its decision, which takes cuts since June to 0.63 per cent.
"In making the decision to cut interest rates we also have to consider our 294,000 deposit account customers, many of whom depend on interest income," Ms Inglis said.
"As a customer-owned organisation we need to ensure there is an appropriate balance between the needs of all customers when setting interest rates."
Greater Bank said owner-occupied, investment, line of credit and business loan base rates will drop by 0.14 per cent from October 15. Chief executive Scott Morgan said the changes offered opportunities for those looking to borrow.
"We also need to factor in our large base of depositing customers, many of whom are investors or self-funded retirees who rely heavily on income from interest," Mr Morgan said.
"As such, we have taken a balanced approach to interest rate changes to ensure a balanced outcome for all."
Treasurer Josh Frydenberg has slammed the major banks for failing to pass on in full.
"It is the government's expectation that the banks will pass on this 25 basis point rate cut in full," Mr Frydenberg said in a press conference. "What this means for an Australian family with a mortgage of $400,000 is $720 less a year in interest payments."
That rate puts the Australian cash rate below 1 per cent for the time time in the country's history.
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Matt Carr
Matt began his Newcastle Herald career as a cadet in 2009. He is a Walkley nominated reporter who has covered councils, police and general news rounds across the Upper Hunter, Port Stephens, Maitland, Lake Macquarie, Cessnock and Newcastle. Now his focus is on digital storytelling and breaking news.
Matt began his Newcastle Herald career as a cadet in 2009. He is a Walkley nominated reporter who has covered councils, police and general news rounds across the Upper Hunter, Port Stephens, Maitland, Lake Macquarie, Cessnock and Newcastle. Now his focus is on digital storytelling and breaking news.
