Earlier this month, the Reserve Bank of Australia cut the official cash rate for the second consecutive month, now at 4.25 percent, much to the jubilation of home owners across the country.
And while the banks were very quick to announce their intentions to pass on rates cuts to home loan customers, very little was said about business lending rates. So we at Mozo started to snoop around to find out: why all the silence?
Our analysis reveals that business lenders are slowly coming to the rates cuts party but, to date, only half of the 16 business lenders in our database have passed through both the November and December rate cuts. Of the business lenders, Citibank and IMB are the worst offenders, yet to pass on any of the cuts to their small business customers.
Of the Big Four banks, Commonwealth Bank and Westpac have passed on the full 0.5 percent cut while ANZ and NAB have only passed on 0.45 percent.
But, wait there’s more. Small businesses aren’t just missing out on full rate cuts, business lenders are taking almost double the amount of time to implement the rate reductions. The average time taken to implement November and December rate cuts for variable rate home loans was 10 days. By comparison, lenders have typically taken 21 days to implement rate reductions for business loan customers.
We can see no justification for this. It’s time the banks stopped dragging the chain and treating small business clients as second class customers.