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CUA to pass on RBA's 0.25% p.a. reduction across all variable home loan rates

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Australia’s largest customer-owned banking organisation, CUA, will lower interest rates by 0.25% p.a. across its variable owner-occupied and investor home loans, following the Reserve Bank’s decision yesterday to reduce the official cash rate.

CEO Paul Lewis said CUA had carefully considered the interests of members, given the broader economic climate.

“CUA, like all lenders, has a role to play to reassure our members in this unprecedented and uncertain economic environment,” Mr Lewis said.

“We have passed on the full 0.25% p.a. rate cut to borrowers with variable rate home loans to help support our members with home loans, including both owner-occupiers and investors.”

The new home loan rates will be effective from 24 March 2020 for all variable loan products, excluding CUA Rate Breaker, which will be effective on 21 April 2020.

Mr Lewis noted that it was becoming increasingly challenging for CUA to absorb record low interest rates while balancing the best interests of all members – those with loans, as well as deposit holders – who are impacted in different ways by falling interest rates.

“These are tough decisions. CUA’s lending margins are already among the tightest in the market and reductions in the official cash rate adversely impact our profitability,” he said.

“This is the fourth interest rate reduction in the past year and we have strived to pass on as much of those rate reductions as we can, across our suite of variable rate home loans.

“As a customer-owned business, we need to make decisions that are in the best interests of our broad member base and this has meant doing everything we can to manage the impact of rate cuts across both lending and deposits.”

Mr Lewis said it was important to remember that as a customer-owned organisation, generating sustainable profits remains important.

“Profits provide our only source of core capital to continue delivering competitively priced products to current and future members,” he said.

“Maintaining a profitable business allows us to invest in service improvements and digital banking initiatives that will allow us to keep pace with the changing banking needs and expectations of our members.”

Borrowers with a CUA variable rate home loan will receive a notice in the coming weeks of the rate change and new repayment amounts applicable to their loan. To discuss the changes, members are encouraged to contact their personal banker via iM CUA, visit their nearest CUA branch or call 133 282.

* CUA Rate Breaker members will receive rate reductions in line with the relevant terms and conditions for that product, with new rates effective 21 April 2020.