Surprise, surprise – many lenders are refusing to pass on the interest rate cut to borrowers, preferring instead to take the difference in pure profit.

Half of all lenders have refused to confirm whether or not they will pass on any of the 25 basis point cut made by the Reserve bank. Of those who have committed, most of them will either pass on only some of the cut or will pass it on at a later date – padding out their profits in the meantime.

Some lenders have opted to pass on only 15 of the 25 basis points and then only in June – almost a month after the RBA cut.

Michelle Hutchison, spokeswoman for Finder.com.au, was disappointed but not surprised by the greed of lenders.

“I think it’s really disappointing,” she said to news.com.au, “that we have seen so many lenders that haven’t announced interest rate cuts yet. And of the ones that have so many haven’t passed it on in full.

“There’s no reason why they can’t afford to; we are seeing record profits from lenders.”

Tom Godfrey from consumer group Choice agreed heartily:

“These banks are hardly on Struggle Street,” he said, “their mortgage customers deserve better.”

Steven Munchenberg, chief executive officer of the Australian Bankers’ Association, explained the failure to pass on rate cuts as being driven by funding costs.

“The banks’ margins are getting tighter and tighter all the time.

“When banks announced their profits recently, while their profits had grown their share prices all went down because they are finding it harder to remain as profitable.”

Surely this is an outright contradiction?

Profits are what a business has after all debts and expenses are paid. Profits are what make a business profitable. So if your profits have grown – you are profitable.

Mr Munchenberg was also undercut by the very people he was trying to defend: The ANZ Bank announced that funding costs have not increased pressure on the banks. A statement echoed by the Reserve Bank.

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