The Co-operative Bank moved almost immediately after the Reserve Bank announcement to pass on the full 25 basis point OCR cut.
Chief executive Bruce McLaughlin says it wasn't a hard decision to make but it was the correct one.
The only big bank to move on Thursday was ANZ which only passed on 10 of the 25 point cut to customers. It has dropped its floating and flexible home loans to 5.64% and 5.75% respectively.
In a statement the bank blamed rising funding costs for not passing on the full cut.
"Over the last 18 months, offshore wholesale funding costs have increased significantly. Until now, and unlike some other banks, ANZ has passed on all the recent OCR rate cuts in full. But international volatility has proved to be more than temporary so these extra costs now need to be reflected in our lending rates."
It also says that changes to floating and flexible rates won’t impact most ANZ home loan customers because around 76% of its booked is fixed rate, compared to only 36% four years ago.
The Reserve Bank disagrees. Governor Graeme Wheeler told Parliament's Finance and Expenditure Select committee all the OCR should be passed on.
"I'd expect the floating rates to come down by 25 basis points," Wheeler said.
The central bank says that the effects of the rise in foreign funding costs was 'relatively mild' for banks at the moment, given they were currently funding only a small share of new lending from overseas borrowing because of strong local deposit growth.
Only a relatively small share of their funding is coming from overseas currently and funding is coming from growth in term deposit books.
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