Yellow Brick Road passes on the full 25 bps reduction with Macquarie Group firepower

Yellow Brick Road has passed on the full 25 basis point reduction in the official cash rate to its Empower home loan customers. 

Its comes as all three big banks, NAB first, then Commonwealth Bank and Westpac, announced they will pass on 20 out of the 25 basis points cut from the cash rate by the RBA yesterday. ANZ advises its rate cut next Friday.

The YBR rate reduction will put the variable rate at 5.25% per annum for the first year and as low as 5.54% over the remaining life of the Empower loan.

“We negotiated hard for this .25 per cent rate reduction because we believe our clients deserve it and we want to help them enjoy their holiday season, even if that means that we have to eat some of our margin,” says Mark Bouris.

“We hoped the major banks would do the same for their customers, but with NAB, CBA and Westpac only going .20 per cent, consumers aren’t feeling the confidence that our economy desperately needs right now,” Mr Bouris said.

YBR's new variable home loan rate is effective from December 10. Its interest rate on savings deposits sits unchanged at 7.7% p.a.

It was recently announced that Macquarie Group was combining with Yellow Brick Road to take a stake in the home loans market, which will cause Yellow Brick Road to go head-to-head with the big four banks.

Property Observer commentator Robert Simeon predicted that under the deal, Yellow Brick Road would actively undercut the big banks.

"The big four have actively acquired all the second-tier banks to protect their market share, which is approximately 80% of the Australian home loan market," Robert Simeon wrote. Its Cup Week launch of a variable-rate mortgage pitched at a 115-basis-point discount resulted in a 120% surge in written business, achieving $320m for the month. YBR had started advertising on the Nine Network, its 19.9% stake holder, but postponed the slots as it couldn't keep up with the inquiry rate.