Commonwealth Bank moves to slash interest rates on home loans following RBA decision
The Reserve Bank of Australia cut the cash rate on Tuesday by 25 basis points, to 3.60 per cent for the third rate cut of the cycle.
Commonwealth Bank announced its own cut about 45 minutes later, and has now all followed the central bank on all three cuts, passing on the entire 75 basis points in cuts to their customers.
But mortgage holders will have to wait a couple of weeks before they see any relief, with the bank passing on the savings to customers in 10 days time.
CBA was the first of the major banks to announce it would pass on the full 0.25 per cent interest rate cut to customers on a variable home loan.
It would come into effect from August 22.
Retail group executive Angus Sullivan said Australian mortgage holders are starting to get a little breathing room back in their budgets.
'It will be very welcome for those with a home loan,' he said.
'We can see people are responding to lower interest rates in different ways - some are covering everyday costs a little more comfortably, others are getting ahead on their home loans.'
Following Tuesday's move by the RBA, homeowners are tipped to be the major winners.
Mortgage holders with a $500,000 mortgage are set to save $2884 per year if the cash rate is passed on in full, while those owing $1m are tipped to save $5768 a year.
This is on top of the first two interest rate cuts that the banks passed on in full back in February and May.
Canstar data insights director Sally Tindall said the three interest rate cuts combined should mean Australians variable interest rates come in around 5.50 per cent.
'In fact, if the majority of banks pass the cut on in full, which they should absolutely do, then there should be over 30 lenders offering at least one variable rate under 5.25 per cent,' she said.
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