Home and business borrowers will probably receive just two-thirds of the 0.50 point interest rate cut delivered by the Reserve Bank yesterday after the Bank of Queensland went out ahead of its rivals and delivered only 0.35 points.
The bank's decision to cut its variable rate to 7.35 rather than 7.11 per cent will deny a customer with a $300,000 mortgage rate $46 per month.
Fairfax calculations suggest if all of the banks withheld as much of the cut as the Bank of Queensland they would hang on to an extra $1.2 billion a year.
RateCity chief executive Damian Smith said none of the big banks would probably show their hand until the ANZ gave its decision at its scheduled rates review on May 11.
''They will allow ANZ to play its new role as unofficial price-setter,'' he said. ''The signals from the big four suggest that they will try to hold on to part of this cut.''
New ACT home owners Jill O'Donnell and fiancé Kieran Cotterall will be hoping their bank does the right thing by them. They bought their first home in Monash about two months ago and are set to move in next month.
''We've both got steady incomes, but it was still a struggle to save,'' Ms O'Donnell said.
''We were both lucky enough to start with some savings behind us.''
Ms O'Donnell said the couple was going to take out a fixed-rate loan because of the uncertainty surrounding rates, but switched to variable when filling out the final paperwork.
''So this [cut] is very good news,'' she said.
But they will have to wait and see how much they save.
The new practice adopted by the big four this year of reviewing and adjusting their rates independently of the Reserve is infuriating the bank.
Fairfax has learned that one of the reasons the Reserve Bank went for a big cut of 0.50 points yesterday rather than a more traditional 0.25 with the option of a follow-up was a concern that each time one of the big four adjusted its rates separately from the Reserve, consumer and business confidence took a hit.
The Reserve believes a ''drip feed'' of negative news about small adjustments (such as the ANZ's two recent increases of 0.6 per cent) is negating the effect on confidence of its bigger cuts in the overall level of rates.
By cutting once by 0.50 points the bank believes it can cut through the ''noise'' of multiple decisions by private banks.
The big banks' new practice of not immediately responding to the Reserve left Treasurer Wayne Swan unable to shame banks for not passing on cuts as he has done in the past.
Bank customers would be ''very angry'' if the cut was not passed on in full, Mr Swan said. ''Consumers will expect that, but the fact is that if they are unhappy with their financial institution, people can go down the road and get a better deal.''
If fully passed on, the 0.50 cut in the Reserve Bank cash rate will save a borrower with a $300,000 mortgage $96 a month.
Private bank analysts believe that withholding 0.10 or 0.15 points of the 0.50 cut would complete the process of restoring bank margins to where they were in mid-2011, before wholesale borrowing costs ballooned. Announcing the board decision, Reserve Bank governor Glenn Stevens hinted he expected the private banks to soon stop widening their margins, saying their wholesale funding costs had ''declined over recent months''.
Contributing to the Reserve's decision to cut rates 0.50 points was a feeling economic indicators have weakened.
The central bank believes inflation figures published before Anzac Day showed evidence of deep discounting by retailers desperate to move stock.
The Reserve made its decision taking into account what it knows about next week's budget, meaning it does not necessarily expect to cut rates further in response to it. Futures traders were last night pricing in cuts totalling a further 0.50 points in the next three months. with Stephanie Anderson