Major banks move on rates after RBA cut
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, passing on the rate cut in full to variable rate home loan customers, effective from August 22.
Westpac was not far behind, similarly passing on the cut in full to their variable home loan customers, however the change will not be implemented for another two weeks, making it effective from August 26.
ANZ announced similar terms for borrowers, also decreasing variable rates by 25 basis points effective August 22. The first big four bank has moved on interest rates. NewsWire Credit: NCA NewsWire
CBA 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.'
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. Australians in $500k debt will have $2884 more to spend a year following Tuesday's rate cut. Credit: News Corp Australia, NewsWire/ Monique Harmer
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.
Things are looking worse for savers though, with banks also looking to pass on the RBA's cuts to savings accounts.
Westpac will pass on a 0.25 per cent cut to the variable rate of its Westpac Life with bonus interest account from August 22 - four days before the rate cut is passed on to home loan customers.
New customers applying online for a variable rate Westpac eSaver account with a five-month introductory rate will also see the rate dropped from August 22.
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