Seven News Truth in Banking campaign
Banks’ refusal to pass on the full interest rate cut has cost every Australian family more than $10,000 over the past four years, a Seven News investigation has revealed.
With a half million dollar mortgage, Safdar Iqbal has keenly watched the Reserve Bank cutting interest rates - only to see his bank not passing it all on.
He wanted to know what difference it made in dollars, and couldn't believe the result.
“If my bank kept up with the RBA I would have saved close to 3-thousand dollars in the last 12 months,” he told Seven News.
He's left wondering what a difference that money could have made.
“For us it's a pretty good decent holidays. The power bills are going up the water bills going to be up soon. Everything's going up nothing's coming down.”
The banks once moved in step with the Reserve but since the Global Financial Crisis in 2008 the gap between them has been growing.
OneBigSwitch has calculated that on a 400-thousand dollar loan, banks not giving the full rate cut has cost you around 10-and-a-half-thousand dollars over the last four years. It leaves you paying 250 dollars extra a month.
According to Christopher Zinn of OneBigSwitch: “There's currently more than one percent extra which the banks have held onto through not passing on cash rate changes.”
For an average Sydney home loan of nearly $422,000, the cost has been almost $12,000 and means an extra 445 dollars a month.
For an average Melbourne home loan of $388,000 the cost has been almost $11,000 and means an extra $409 a month.
For an average Brisbane home loan of $346,000 the cost has been more than $9,500 and means an extra $365 a month.
For an average Adelaide home loan of more than $308,000 the cost has been $8,500 and means an extra $325 dollars a month.
For an average Perth home loan of almost $385,000 the cost has been around $10,700, more than $400 a month extra.
Michelle Hutchison from RateCity says: “Ratecity estimates that variable borrowers would have saved a combined over $18 billion in the past five years.”
According to Chrisopher Zinn, “The bank knows exactly how much extra you're paying and what the benefit is to them but as individuals we don't know what the cost is to us.”
But that is all about to change with the launch of the 'Truth in Banking' campaign, it begins with giving you a way to calculate how much the interest rate gap has cost you.
The online calculator is created by OneBigSwitch.
Safdar Iqbal tried it today, it revealed he's paying an extra $248 a month.
Click here to find out how much extra you’re paying.
Seven News, Sunrise and Today Tonight will jointly run this campaign encouraging you to find out how much the home loan interest rate gap has cost your budget.
Tell us what you think below.
