Will your bank pass on the full cash rate cut to your home loan?

Home loan interest rates have now hit record lows, after some banks reduced variable rates within minutes of the Reserve Bank cutting the cash rate on Tuesday.
big four banks pass on July 2019 cash rate cut
Source: Vitalii Tairov, Canstar.

The Reserve Bank of Australia (RBA) board voted to cut the cash rate by 0.25 percentage points to a new historic low of 1% on Tuesday, following another cut in June which was the first change in nearly three years.

Since this latest cut, 21 lenders on Canstar’s home loan database have so far promised to reduce home loan interest rates for borrowers, including the big four banks.

Out of those who have moved, six lenders – ANZ, Athena, Greater Bank, Homestar Finance, loans.com.au and State Custodians – have announced they have or will pass on the full cut of 0.25 percentage points, at the time of writing.

ANZ was the first of the major banks to respond to the RBA’s decision, with statements coming from Commonwealth Bank, National Australia Bank and Westpac shortly afterwards.

The big four lenders are reducing their standard variable rate loans for owner occupiers paying principal and interest as follows:

  • ANZ: -0.25 percentage points to 4.93% (comparison rate 5.03%)
  • Commonwealth Bank: -0.19 percentage points to 4.93% (comparison rate 5.08%)
  • NAB: -0.19 percentage points to 4.92% (comparison rate to be advised by NAB)
  • Westpac: -0.20 percentage points to 4.98% (comparison rate 5.12%)

Reductions on standard variable rates with the big four banks also flow through to their package home loans, which bundle different financial products together, such as a credit card or personal loan with a mortgage.

Canstar finance expert Steve Mickenbecker said the bulk of existing borrowers with these lenders have package loans.

“Customers of the major banks have for many years been guided into package loans to take advantage of discounts of around 0.7% from standard variable rates,” Mr Mickenbecker said.

While package loan rates may be lower than standard variable rates, the big four banks all currently charge an annual fee of $395 on package loans.

Taking into account the first round of rate cuts last month and this month’s cuts as detailed above, a borrower with an average $400,000 package home loan on a 30-year term with Commonwealth Bank would see the biggest reduction in monthly repayments out of the big four banks.

How the Big Four Banks Compare on Mortgage Repayments since RBA Cash Rate Cuts in 2019
Bank Monthly repayment before June cash rate cut Monthly repayment after July cash rate cut Savings on monthly repayment
ANZ $2,041 $1,940 $101
Commonwealth Bank $2,091 $1,987 $105
NAB $2,029 $1,926 $103
Westpac $2,046 $1,951 $94
Source: www.canstar.com.au. Repayment calculations based on principal and interest repayments on a loan of $400,000 over a 30-year term. Pre-June cash rate package rates from the major banks based on new owner occupier customers paying principal and interest on a loan of $400,000 at 80% LVR. Post-July cash rate rates from the major banks are based on announced rates for owner occupier principal and interest standard variable loans, with current package discounts applied. July rate cuts for ANZ, Commonwealth Bank, NAB and Westpac are effective as of 12/07/2019, 23/07/2019, 12/07/2019, 16/07/2019, respectively.

Even lower rates are available from some smaller lenders, with Reduce Home Loans now offering the lowest standard variable rate on the market, and the lowest home loan rate Canstar has seen in its 26 years of recording data.

Its Low Rider Home Loan comes with an interest rate of 2.89% (comparison rate 2.89%) for owner occupiers who have at least a 20% deposit saved up.

Reduce Home Loans joins three other lenders who have home loans below 3% – Greater Bank, UBank and Bank of Queensland.

Below is a breakdown from our database of which lenders have announced they will cut variable mortgage rates for owner occupiers, in alphabetical order.

Lenders who have Cut Rates on Owner Occupier Standard Variable Home Loans, Effective from 2 July 2019
Lender Change (%) Effective date Lowest Variable Home Loan Corresponding Variable Rate Corresponding Comparison Rate
AMP -0.20 22/07/19 Basic Variable Rate Loan 4.03% 4.08%
ANZ -0.25 12/07/19 Simplicity PLUS Special 3.63% 3.67%
Athena -0.25 2/07/19 OOC-Refinance Only-P&I 3.09% 3.05%
Bank of Melbourne -0.20 16/07/19 Basic Home Loan 3.59% 3.61%
Bank of Queensland -0.15 23/07/19 Intro Rate Home Loan 3.54% 4.06%
Bank SA -0.20 16/07/19 Standard Variable (pre-cut) 5.15% 5.32%
Bendigo Bank -0.20 29/07/19 Great Rate Home Loan – Discounted Rate 3.57% 3.58%
Commonwealth Bank -0.19 23/07/19 Extra Home Loan (Life of Loan Discount) 3.64% 3.65%
Greater Bank -0.25 29/07/19 Great Rate Home Loan – Discounted Rate 3.57% 3.58%
Homestar Finance -0.25 2/07/19 OOC Hot Rate – Refinance Special 2.99% 2.99%
ING -0.20 18/07/19 Mortgage Simplifier 3.38% 3.41%
loans.com.au -0.25 5/07/19 Smart Home Loan 3.28% 3.30%
ME Bank -0.15 23/07/19 Flexible + Member Package 3.54% 3.97%
Macquarie Bank -0.20 18/07/19* Basic Home Loan 3.44% 3.44%
MyState Bank -0.20 29/07/19** Basic Variable 3.78% 3.81%
NAB -0.19 12/0719 Base Variable Rate Home Loan 3.54% 3.58%
Reduce Home Loans -0.20 2/07/19 Low Rider Home Loan 2.89% 2.89%
St. George Bank -0.20 16/07/19 Standard Rate (pre-cut) 5.16% 5.33%
State Custodians -0.25 24/07/19 Low Rate Home Loan 3.40% 3.42%
Suncorp -0.19 19/07/19 Back to Basics 3.49% 3.50%
Westpac -0.20 16/07/19 Flexi First Option Home Loan 3.78% 3.79%
Source: www.canstar.com.au. Based on standard variable rate movements announced from 2 July 2019 onwards, as seen in Canstar’s home loan database. Table sorted alphabetically. Check terms and conditions with lender for more details.

Canstar will keep this page updated as further announcements are made by lenders passing on the rate cut to customers. Last updated on 8 July 2019 at 3.30pm AEST.

*Macquarie Bank will pass on cuts to new customers on 5 July, while existing customers will receive the reduction on 18 July, 2019.

**MyState Bank will pass on cuts to new customers on 15 July, while existing customers will receive the reduction on 29 July, 2019.

Follow Canstar on Facebook and Twitter for regular updates on loans and savings products following the July 2019 cash rate cut.

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