Federal Treasurer Wayne Swan has said banks cannot justify holding back any of yesterday's interest rate cut even as millions of mortgage holders wait anxiously for them to move.
In a surprise move, the Reserve Bank cut the official cash rate by 25 basis points to a three-year-low of 3.25 per cent.
All of the four big banks say their rates are under review but they are yet to pass on any cut.
Related: RBA cuts interest rates by 25 basis points
The most recent rate cut will see repayments on the average mortgage of $300,000 drop by almost $50 a month – that is if banks decide to pass on the cut.
According to reports published in News Ltd, the big banks will pocket more than $6 million in profit every day they fail to pass on the Reserve Bank's 25-point rate cut to mortgage holders.
The report also says the big banks will “cream off a collective profit of $25 billion this year”.
While the interest rate is at its lowest since October 2009, variable rate home loan borrowers are paying more than they were three years ago.
How much you'll save
*Assumes 25-year standard variable rate loan at an average new interest rate of 6.6 per cent. (Source - CommSec)
'People are switching banks'
Mr Swan says there is already evidence that people are switching banks when they are dissatisfied with their bank's performance.
How to take advantage of a rate cut
"And that's the sort of power that banks ultimately understand." The rate cut, if passed on in full by the major banks, would take their standard variable mortgage rates down around the 6.5 to 6.6 per cent range.
Bank Of Queensland was the first financial institution off the mark, announcing a 20-basis-point reduction in its standard variable mortgage rate within a minute of the RBA's decision becoming public.
Bank of America Merrill Lynch's chief economist for Australia, Saul Eslake, has told ABC News 24 that he now believes the RBA may cut rates again in November and early next year.
Compare home loans at Moneyhound
"Because the Reserve Bank is not only more concerned about the international outlook, and that was the primary reason why they cut rates yesterday, they're becoming more concerned about the outlook for the domestic economy," he said.
"That's partly because they can see the resources boom peaking earlier and at a lower level than they had previously thought."
What should the banks do? Have your say on this story at your Facebook page