Interest Rate Change FAQ

1. What was announced?

• On 4 May 2023 the Reserve Bank of Australia (RBA) reduced the cash rate by 0.25%. The official interest rate is now 1.75% – the lowest it has been in Australia’s history.
• In response to the change in official interest rates, Queenslanders Credit Union has reduced the interest on all existing variable rate home loans and mortgage secured commercial loans by 0.15%.
• The new rates will be effective from 24 May for existing home loans.

2. How much better off will I be with this rate cut?

• This latest rate change means customers with an Ultimate Home Loan will save about $12 a fortnight on an average mortgage of $300,000 (30 year term).

3. What’s the difference between a 0.15% and 0.25% rate cut on my home loan?

• If you have an average balance of $300,000 on the Ultimate Home Loan, the difference in a cut of 0.15% compared to 0.25% is $8.16 per fortnight.

4. Why didn’t Queenslanders pass on the full RBA rate cut?

• The Reserve Bank’s official cash rate is just one factor we consider when we determine interest rates.
• Despite the many misconceptions out there, banks don’t get their money from the RBA so there is no real discount to pass on when the RBA announces cuts. The RBA merely sets a recommendation for interest rates based on the current state of the economy.
• Unlike many of our competitors, who fund their loans through comparatively cheap money from overseas, Queenslanders uses the savings and investments of our customers to fund all loans we issue. This means that every time we cut rates on loans, we also need to reduce the interest rate we pay on the savings and investments held by our customers.
• We have considered the needs of both our depositors and borrowers and delivered a rate cut we believe is fair and equitable for everyone.
• Unlike some competitors, Queenslanders did not increase variable home loan interest rates outside official RBA movements in recent months. By leaving our rates unchanged when competitors made increases, we have less room to decrease the rates now.

5. Does this mean my Queenslanders home loan is no longer competitively priced?

• You can feel comfortable that your Queenslanders home loan still represents great value. A recent audit by independent ratings firm Canstar saw Queenslanders awarded a five star rating for our fixed and variable home loans for the sixth year in a row . The Canstar model considers both interest rates and product features, with the five star rating only awarded to the top 5% to 10% of home loans.

6. But Queenslanders doesn’t need to make profits for shareholders?

• As a customer-owned financial institution, our sole focus is providing the best value banking experience possible.
• We are certainly not concerned with making massive profits, but we do have to stick to certain regulations and ensure our business remains sustainable.

7. Why does the rate cut take some time to flow through to existing customers?

• We have a clear policy for interest rate changes as we believe in being completely fair and transparent.
• Because we need time to process repayment changes when interest rates go up, there is always a two week timeframe before we pass on any interest rate movement. It is the same for interest rate rises as well as decreases.

8. Will the repayments change on my variable rate home loan?

• The minimum required repayment under your loan contract will change. The new repayment amount will be effective from the next due date after 21 June 2016.
• If you currently make your repayments via a direct debit established by Queenslanders or through our automatic payroll deduction service (where repayment amount is set to REPAY), we will automatically reduce your repayments in line with the change in interest rates.
• If you make your repayment via any other method and wish to reduce it to the new minimum amount we ask you to contact your nearest branch or QConnect on 1800 753 377.
• Alternatively, if you wish to leave your repayments at the current amount you are more than welcome to do so. This will help you pay off your loan sooner and reduce the amount of interest you pay over the life of your loan.

9. Why have the Pensioner Account rates dropped further than the other savings accounts?

• In the past we have always aligned the Pensioner Account interest rates with the official Deeming Rate used to assess someone’s eligibility for a pension.
• In recent times, changes to official deeming rates have not kept pace with changes to official cash rates. The official deeming date is now well in excess of many term deposit rates and high-interest online savings account.
• Most of our competitors have reacted to this by reducing the interest rate on their equivalent of the Pensioner Account.
• Even by passing on the 0.25%p.a. cut to the Pensioner Account, our account remains one of the most competitively priced in the market.

10. What can I do if I am unhappy with the change?

• At Queenslanders, we remain committed to our mantra of providing banking that’s personal. We want to make sure you have the home loan that is right for your needs. If you want to explore other options, including locking in a competitive fixed rate or splitting your loan part fixed and part variable, please get in touch.