Big four banks to pass on RBA rate cut to borrowers

The official cash rate has been slashed to its lowest level on record – just 0.5%. Banks typically use this rate as a guide to set interest rates on their products, such as home loans and savings accounts. How have the big four banks reacted to the cut?  

Today, the Reserve Bank of Australia (RBA) cut the official cash rate by 0.25 percentage points, the lowest rate on record. It’s the fourth cut to the rate since June last year, when it was reduced from 1.5% to 1.25%. That June cut was the first change since the central bank lowered it to 1.5% in August, 2016.

Prior to today’s reduction, National Australia Bank (NAB) had the lowest rate on offer of the big four banks – NAB, ANZ, Westpac and Commonwealth Bank (CBA) – at 3.09% (comparison rate 3.09%). Since the RBA announced the cut, all four of the major Australian banks have cut their home loan interest rates.

Westpac was the first of the big four to cut the interest rates on some of its loans today, by the full 0.25%, issuing a statement just nine minutes after the RBA’s announcement. Commonwealth Bank was just a minute slower, tweeting 10 minutes after the RBA announcement that it would pass the entire cut onto some of its home loan customers, too.

Following the RBA’s cash rate decision we have reduced the variable rates for our home loan customers by 0.25% p.a.

— CBA Newsroom (@CBAnewsroom) March 3, 2020

NAB followed, also announcing via X at 3.55pm AEDT, while ANZ issued a media statement confirming their reductions 4.30pm AEDT. Non-major lenders have also cut their rates. The lowest rate on Canstar’s database at time of publication is now 2.44%.

NAB has lowered home loan, small business and business overdraft variable rates by 25bps, effective 13 March.

— NAB (@NAB) March 3, 2020

Westpac cuts to home loan rates:

Westpac’s cuts are effective from 17 March, 2020, and apply to variable interest rates for home loan customers, “as well as rates on small business cash-based loans and overdrafts”, the bank said in a statement.

“The reduction means an owner occupier customer with a standard variable home loan of $400,000 on principal and interest repayments will save an extra $60 per month, or $720 per year,” the statement said.

The rates are:

• Owner-occupier principal and interest variable home loan: 4.58% (comparison rate to be advised)
• Residential investment property principal and interest variable loan rate: 5.13% (comparison rate to be advised)
• Owner-occupier interest-only variable home loan rate: 5.17% (comparison rate to be advised)
• Residential investment property variable interest-only loan rate:  5.39%. (comparison rate to be advised)

Commonwealth Bank cuts to home loan rates:

CBA’s cuts mean its new rates will be the “lowest on record” for Australia’s largest bank, Angus Sullivan, Group Executive Retail Banking Services said in a statement.

The bank’s new standard variable rates, which come into effect on 24 March, are:

• Owner-occupier principal and interest standard variable rate: 4.55% p.a. (comparison rate to be advised)
• Investor principal and interest standard variable rate: 5.13%. (comparison rate to be advised)
• Owner-occupier interest only standard variable rate: 5.04% p.a. (comparison rate to be advised)
• Investor interest only standard variable rate: 5.39% (comparison rate to be advised)

Related: RBA cuts as coronavirus worsens: How will it impact the economy, property market and interest rates?

National Australia Bank cuts to home loan rates:

NAB announced on X that it had reduced home loan, small business and business overdraft variable rates by 0.25 percentage points, effective 13 March.

The bank said, in a statement, that their “Tailored Home Loan” variable rates would be:

• Owner-occupier principal and interest-only variable rate: 4.77% (comparison rate to be advised)
• Investor principal and interest-only variable rate: 5.37% (comparison rate to be advised)
• Owner-occupier interest-only variable rate: 5.34% (comparison rate to be advised)
• Investor interest-only variable rate: 5.67% (comparison rate to be advised)

“In making these decisions we have had to consider the unprecedented challenges of the low interest-rate environment and impacts of the bushfires and coronavirus outbreak on our customers and the broader economy,” NAB Chief Customer Officer Consumer Banking Mike Baird said.

ANZ cuts to home loan rates:

ANZ – the last of the big four to budge – made variable rate cuts by between 0.25 and 0.35 percentage points to support customers and the broader economy through this period of uncertainty, the bank said in a statement today.

“Customers wanting to increase the money in their pocket each month can contact us to decrease their monthly minimum payments,” ANZ Group Executive Australia Retail & Commercial Mark Hand said.

The bank’s new standard variable rates, which come into effect on 13 March, are:

• Owner occupier principal and interest variable rate: 4.54% (comparison rate to be advised by ANZ)
• Investor principal and interest variable rate: 5.14% (comparison rate to be advised by ANZ)
• Owner occupier interest-only variable rate: 5.09% (comparison rate to be advised by ANZ)
• Investor interest-only variable rate: 5.39% (comparison rate to be advised by ANZ)

Additional reporting: Ellie McLachlan

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