Couple doing it tough as bank holds back

Like many Illawarra residents, Kelly and James Collins held their breath waiting for Tuesday's Reserve Bank announcement on interest rates.

When news of the 25 basis point cut finally came, the Barrack Heights couple was forced to play another waiting game yesterday before their bank announced it would cut its mortgage rates by just 20 basis points.

"When we're paying so much interest as we do, the cuts should be passed in full," said Mrs Collins, who has a $335,000 mortgage with Westpac.

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"I think for people that have kids and are struggling, it does get frustrating because it goes back to the bank instead of us.

"You kind of get excited to think that interest rates are going to drop and that you're going to get a little bit of extra money in your pocket or that you can knock off a little bit more on your mortgage to actually reduce it."

Two of the other four big lenders - NAB and the Commonwealth Bank - also made 20 basis point cuts to mortgage rates yesterday, while the ANZ is yet to make an announcement.

Mr and Mrs Collins both work full-time to pay off their home.

"I'm working full-time in family day care and my husband is a carpenter who works away in Griffith from Monday to Friday - just to make ends meet," Mrs Collins said.

According to Treasurer Wayne Swan, families like the Collins have every right to be frustrated.

Tuesday's cash rate cut was the sixth in 12 months, but banks have rarely passed on the cuts in full during that time.

"It's very important that the big banks pass on this rate cut in full," Mr Swan said.

"Our four big banks are very profitable and they shouldn't be taking their customers for a ride at Christmas."

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