Major banks pass on RBA interest rate cuts to millions: 'Looking forward to relief'

Yahoo

18-02-2025

NAB, Commonwealth Bank, and Westpac have all announced they will pass on the Reserve Bank of Australia's interest rate cut to customers. The central bank cut the official cash rate by 0.25 per cent to 4.10 per cent today, marking the first cut in more than four years.
Three of the Big Four wasted no time in their own announcements and said they will follow in the central bank's steps.
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Westpac revealed the following changes for home loan customers:
It will decrease home loan variable interest rates by 0.25 per cent p.a. for new and existing customers, effective March 4.
CBA will decrease home loan variable interest rates by 0.25 per cent p.a., which will be effective from February 28.
'We know that cash rate increases have been challenging for our home loan customers and they are looking forward to some relief," CBA's Group Executive, Retail Banking Services, Angus Sullivan said.
NAB will reduce the standard variable home loan interest rate by 0.25 per cent, effective from February 28.
'We are very pleased to deliver this rate cut to home loan customers - we understand how tough it's been for many Australians," NAB Group Executive, Personal Bank, Ana Marinkovic said.
'The extended period of high interest rates has placed real strain on household budgets and this rate reduction will help to ease the financial burden."
Canstar data insights director Sally Tindall told Yahoo Finance she expected lenders "big and small" to pass this rate cut on in full to all variable rate mortgage customers.
'When rates were on the rise, the big banks took 10 to 14 days to pass on a hike so there's no reason for them not to pass on cuts in the same timeframe, if not faster," she said.
"Now rates are on the way down, triple-check your bank is passing on the rate cut in full, understand what your new rate will be but also check what you might get from a competitor."
While banks generally follow cash rate movements, there is no guarantee they will.
Of the 10 RBA rate cuts over the past 10 years, Canstar found only four were passed on in full by CBA, NAB and ANZ, with Westpac only passing on two.
Borrowers will want to be looking for a home loan starting with a '5' to be competitive.
Canstar research found more than 35 different lenders were offering at least one variable rate under 6 per cent to owner-occupiers.
If lenders pass the 0.25 per cent cut on in full to new customers, then there could be more than 65 banks offering at least a rate starting with a '5'.
Based on the current lowest rate, the new lowest rate would be 5.50 per cent after this cut.
The average existing rate would be lowered to 6.07 per cent, while new customers would be on an average rate of 5.99 per cent.Sign in to access your portfolio