The Australian Competition and Consumer Commission’s (ACCC) Home Loan Price Inquiry interim report has just been released, which revealed the banks’ major motivators in not passing on savings to consumers. 

ACCC chair Rod Sims commented that “the banks were attempting to shore up their profitability during a period of low interest rates”. 

“It was their strong preference, after the RBA’s cuts, not to further reduce the rates customers were earning on some deposit products as they approached zero per cent,” he indicated.  

He added that “the banks’ reluctance to cut these deposit rates led them to anticipate lower profits, which they aimed to recover by not always fully passing through cash rate cuts to their mortgage customers”.

Analysis from the consumer watchdog also found that the big four banks had benefited from sustained decreases to their funding costs over the course of 2019, with the report revealing that while headline rates for owner-occupier home loans with principal and interest repayments did fall overall during 2018 and 2019, the banks’ funding costs fell even more over the same period. 

The interim report also revealed that while average interest rates charged by banks on home loans did fall across 2019, customers are still paying more than they should be due to a lack of price transparency and higher interest rates impacting existing customers. 

One finding from the report even flagged that home loan pricing practices continue to make it difficult for consumers to compare different mortgage products. 

Mr Sims said the inquiry findings “shed an important light on bank decision making and raise questions about whether the banks could, at the time, have passed on a higher proportion of those RBA cash rate cuts to their mortgage customers”. 

At the same time, he said the ACCC does recognise that “much has changed in the economic and funding environment since last year”. 

“The banks are playing an important role in supporting the economy.”

The interim report examined home loan prices charged by the big four banks between 1 January 2019 and 31 October 2019.

Treasurer Josh Frydenberg issued the direction for an inquiry into the market for the supply of home loans in October last year after he expressed frustration with the big four banks for not fully passing on rate cut savings from the Reserve Bank of Australia in July 2019 or October 2019.

More to come.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

more on this topic

Banking

Central banks set to influence global markets with key rate decisions

In a week that could define the economic landscape for the remainder of the year, central banks across the globe are poised to make significant interest rate decisions. State Street Investment ...Read more

Banking

Global payment companies see 8% revenue growth in 2025, GlobalData reports

The global payments industry demonstrated robust growth in 2025, with the top 20 publicly listed payment companies reporting an 8% increase in combined revenue, totalling $280 billion. This growth, as ...Read more

Banking

Banks urged to embrace existing payment technologies over AI hype

In the rapidly evolving landscape of financial technology, the focus has increasingly shifted towards artificial intelligence (AI) as the next frontier for innovation. However, Ian Boyd, General ...Read more

Banking

EMEA banks enjoy profit growth amid revenue challenges in 2025

In a year marked by economic turbulence and geopolitical uncertainties, the largest banks across Europe, the Middle East, and Africa (EMEA) have reported a paradoxical trend: shrinking or stagnant ...Read more

Banking

Australian major banks demonstrate resilience amid economic uncertainty

In the face of economic headwinds, Australia's major banks have reported robust half-year results, showcasing their resilience amid rising uncertainty. According to KPMG’s Australian Major Banks Half ...Read more

Banking

RBA's new ruling on card surcharges sparks debate among businesses and banks

In a significant move aimed at enhancing transparency and fairness in the Australian payments landscape, the Reserve Bank of Australia (RBA) has announced the removal of surcharging on debit, prepaid, ...Read more

Banking

Australian SMBs lose two business weeks annually to late payments, report finds

In a startling revelation, the latest report by GoCardless, a global bank payment company, highlights the crippling impact of late payments on small and medium businesses (SMBs) across AustraliaRead more

Banking

Brighten’s reverse‑mortgage bet: why a niche product could be non‑banks’ next profit engine

Brighten has created a dedicated reverse‑mortgage leadership post, signalling a strategic push into equity release as Australia’s demographic curve tilts older and wealth concentrates in housingRead more