Meanwhile, ANZ will only pass on some of the cut, while Westpac is yet to respond after the Reserve Bank board reduced the cash rate by 0.25 percentage points to 1.25% today, marking the first change to the rate since the central bank lowered it to 1.5% in August 2016.
Commonwealth Bank and National Australia have announced that they will reduce their standard variable rates for owner occupiers and investors by 0.25 percentage points, while ANZ will cut its standard variable rates by 0.18 percentage points.
For owner occupiers paying principal and interest (P&I), NAB’s standard variable rate will decrease to 5.11% and CBA’s rate will fall to 5.12% (comparison rates 5.24% and 5.27%, respectively).
The rate cuts will reduce the minimum required repayment by about $62 a month (or $744 a year), based on a mortgage of $400,000, for NAB and CBA customers.
NAB Chief Customer Officer Mike Baird said the bank’s standard variable rate will be the lowest it has been for NAB in more than 40 years.
He said while the lower cash rate and lower funding costs for banks in recent months have helped with today’s decision, he warned that there continued to be “intense competition and increasing deposit costs” which put pressure on lenders.
“Reducing our variable home loan interest rates by the full 0.25 percentage points per annum is the right decision today,” Mr Baird cautioned.
CBA’s executive of retail banking, Angus Sullivan said the bank carefully considered the RBA rate cut, the current funding environment, its regulatory commitments, capital requirements and community expectations in its decision today.
As for owner occupiers paying interest only, the standard variable rate will drop to 5.67% and 5.68% for CBA and NAB customers, respectively (comparison rates 5.48% and 5.47%, respectively).
ANZ’s standard variable rate for owner occupiers paying principal and interest will fall from 5.36% (comparison rate 5.46%) to 5.18% (comparison rate 5.28%).
This means a borrower with an average $400,000 home loan with a 30-year term would see their monthly repayments fall by $44 to $2,192.
ANZ’s executive of retail and commercial, Mark Hand said he understands that some home loan customers would be disappointed by ANZ’s decision to not pass on the full cut.
“In making this decision, we have weighed up a number of factors, such as business performance, market conditions and the impact on our customers, including our depositors,” he said.
For owner-occupiers paying interest-only, the standard variable rate will be lowered to 5.73% (comparison rate 5.50%).
Westpac told Canstar that it was reviewing its home loan rates. Its standard variable rate for owner occupiers paying P&I is currently 5.38% (comparison rate 5.53%).
A number of smaller lenders have announced that they will pass on the full rate decrease, including Athena, Homestar and Reduce Home Loans.