Mortgage lenders divided on margin versus market share

Almost half of the mortgage lenders that have cut rates since the Reserve Bank announced a 25 basis point reduction in the cash rate last week have not passed on the full rate cut, according to comparison site finder.come.au.

Commonwealth Bank subsidiary Bankwest has made the lowest cut - just 17 bps. CBA and National Australia Bank passed on 20 bps and Westpac cut by 22 bps (along with its subsidiaries St George Bank, BankSA and Bank of Melbourne).

Among the mid-tier banks, Bendigo and Adelaide Bank and Bank of Queensland passed on 20 basis points.

Teachers Mutual Bank took the unusual step of making four different rate changes to its Solutions Plus Home Loan: borrowers with loans between A$150,000 and $249,999 will get a 21 bps cut; borrowers with loans between $250,000 and $499,999 will get a 25 bps cut; borrowers with loans between $500,000 and $749,999 will get a ten bps cut; and borrowers with loans worth $750,000 and more will get a 15 bps cut.

A total of 11 lenders chose not to pass on the full cash rate reduction.

CBA, NAB and others that did not pass on 25 bps made a point of emphasising that they would hold deposit rates or, in some cases increase them.

Deposit takers are worried about the prospect of a big outflow from savings accounts, as investors look for better returns.

Among lenders that announced changes on Friday, CUA cut its Fresh Start Home Loan by 25 bps to 4.18 per cent.