Australia's big four banks are facing mounting pressure to slash their interest rates after the central bank delivered its fifth cash rate cut in 12 months.
The Reserve Bank of Australia (RBA) yesterday cut the cash rate by 25 basis points to 3.25 per cent.
While the RBA has made 125 basis points worth of cuts since last November, the banks have not passed on all reductions in full, blaming rising funding costs in offshore markets.
Yesterday's cut sparked calls from industry groups, politicians and retailers for the big banks to pass on the savings to mortgage holders.
Australian Chamber of Commerce and Industry (ACCI) director of economics and industry policy Greg Evans said that as the funding pressure for banks had significantly eased, they no longer had a reason to hold back on rate cuts.
"The intention of the Reserve Bank is to provide benefit to real businesses and consumers," Mr Evans said. "It is not to assist banks and their profitability."
Opposition treasury spokesman Joe Hockey said there was no reason for the banks not to pass on the cut in full and quickly.
"And, in doing so, hopefully stimulate some domestic consumer and business confidence," he said.
If retail banks pass on the cut in full, mortgage-holders with a $300,000 home loan will save about $48 a month in repayments.
The Bank of Queensland was the first lender to respond to the RBA's cut, but only reduced its standard variable home loan rate by 20 basis points to 6.71 per cent.
"Given the continuing pressure on the cost of funding, a 20-basis-point reduction is the best balance between our customers and shareholders," chief executive Stuart Grimshaw said.
The Commonwealth Bank and Westpac both said they were reviewing their rates.
A National Australia Bank spokeswoman said it stood by its commitment to have the lowest standard variable rate of the four major banks in 2012.
This would mean if any of the other three majors lowered its variable rate, then NAB would ensure its rate was lower.
ANZ will hold its regular monthly meeting to discuss interest rates on November 12.
Retailers believe passing on the RBA cut in full would help stimulate spending in the lead-up to Christmas.
The Housing Industry Association and Master Builders Australia both said banks needed to pass on the cut to ensure non-mining sectors of the economy could grow. AAP