The Reserve Bank of Australia decided to lower the cash rate for the third time in 5 months,  by 25 basis points to 0.75 per cent. Yet, most of the banks have not passed on the full reduction. The cash rate is the amount banks will pay their supplier for a short-term purchase to have enough stock for the next day. The cash rate has a flow on effect through the economy, as it goes on to influence other interest rates such as home loans which in turn impacts consumption in the economy. In failing to pass on the rates, you as a consumer are losing out, potentially impacting capital growth on your investment property. The long-expected move follows months of signals from governor Philip Lowe that the RBA was prepared to push rates lower to increase employment and lift stubbornly low inflation back into the 2-3% target band. After Westpac and ANZ Bank joined their ‘big four’ rivals in defying Treasurer Josh Frydenberg, the banks have now passed on only a part of the interest rate cut. This isn’t the first time the banks have declined to pass on the rate cut in full. Of the last 21 times the Reserve Bank has cut rates since 2008, at least 15 times one of the banks have failed to pass on the cut in full. CBA group executive Angus Sullivan said it is not possible for the banks to pass on the full cut due to profit margins falling. “As the Reserve Bank cash rate has reached record lows, we face a difficult balancing act between the multiple, valid interests of our stakeholders,” he said. Both Treasurer Josh Frydenberg and Prime Minister Scott Morrison have condemned the banks for choosing not to pass on the cut in full. Mr Frydenburg encouraged “people [to] shop around, [and] get the best deal, but also make their displeasure known to their banks because the rate cut should be passed on in full and that would be a good thing for consumers”. “The banks are basically profiteering”, Mr Morrison said, “The public will judge them but I am not buying it.” We encourage you to start demanding better deals, and switching to providers that offer them. At Richman Property Investors, we are glad to offer free consultations to give you strategy and advisory, which comes as an obligation and see if it helps you to improve your situation.