Australian Banks Face Competition Inquiry Into Mortgage Rates

The video discusses the ongoing issue of banks not fully passing on interest rate cuts from the Reserve Bank to home borrowers. The government is pressuring banks to pass on these cuts, but banks argue that their funding costs are not solely based on the central bank's rates. They rely heavily on deposits, which are difficult to reduce further as rates approach zero. The government wants to stimulate spending, but banks need to maintain profitability and shareholder returns. The video highlights the tension between government expectations and banks' financial realities.

What are the banks' arguments regarding their funding costs?

What is the political context surrounding the banks' decisions to not pass on rate cuts in full?