The Commonwealth Bank, NAB, Westpac, and ANZ have all lowered their variable interest rates after the Reserve Bank cut rates for the first time in four years.
Westpac cut its variable rate by 25 basis points to 6.19 per cent, as the first major bank to move.
The bank’s chief executive of consumer products Jason Yetton said a typical borrower would save $90 per month, or $1,080 per year, based on a $500,000 home loan with principal and interest repayments.
‘Customers could use this as an opportunity to get ahead on their mortgage by putting the extra savings into their mortgage repayments, or into their offset account to help reduce the interest on their loan,’ he said.
The other Big Four banks all followed suit, all lowering their variable rate by a quarter of a percentage point, effective on February 28.
The Commonwealth Bank, Australia’s biggest home lender, said the latest cut would provide relief from the aggressive rate hikes, with its executive of retail banking Angus Sullivan declaring: ‘We know that cash rate increases have been challenging for our home loan customers and they are looking forward to some relief.’
ANZ’s group executive of retail Maile Carnegie would help borrowers financially.
‘The Reserve Bank’s decision to reduce the cash rate is an important step for our economy and will be welcome news for our borrower customers, providing some long-awaited relief from cost of living pressures,’ she said.
The Commonwealth Bank , NAB , Westpac , and ANZ have all lowered their variable interest rates after the Reserve Bank cut rates for the first time in four years (pictured is a Melbourne branch)
NAB’s group executive for personal banking Ana Marinkovic said the worst was now over for borrowers.
‘We are very pleased to deliver this rate cut to home loan customers – we understand how tough it’s been for many Australians,’ she 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.’
The average, owner-occupier variable rates offered by banks will fall to 6.07 per cent.
The move marks the start of a much-anticipated monetary easing cycle following 13 rate rises from May 2022 to November 2023.
This left interest rates at their highest level since 2011, following the most aggressive hikes since the late 1980s.
Mortgage holders have been struggling to keep up with high interest rates, with arrears rates climbing after interest rates crept up from a record-low of 0.1 per cent.
Treasurer Jim Chalmers declared the cut was ‘very welcome news for millions of Australians’ with an election due by May.
Reserve Bank Governor Michele Bullock warned it was too early to suggest three more cuts were coming in this cycle, as financial markets are predicting
‘This is the rate relief Australians need and deserve,’ he said.
‘It won’t solve every problem in our economy or in household budgets but it will help.’
But Reserve Bank Governor Michele Bullock warned it was too early to suggest three more cuts were coming in this cycle, as financial markets are predicting.
‘Our feeling at the moment is that is far too confident that that’s as many rate cuts as we’ll be having,’ she said.
‘I can’t say “one and done” – what I can say is that we’ve done one, we’ve moved a bit of restrictiveness, we are still restrictive, and we are waiting for more evidence that we’re getting inflation sustainably back in the band before we are willing to move again.’
Underlying inflation without volatile price movements was at 3.2 per cent in the December quarter, or above the RBA’s 2 to 3 per cent target.
Headline inflation was lower at 2.4 per cent but this was based on one-off $300 electricity rebates.
The Reserve Bank is expecting this measure of inflation, also known as the consumer price index, to soar to 3.7 per cent in late 2025 after Labor’s power rebates finish.
But underlying inflation, known as the trimmed mean, was expected to moderate to 2.7 per cent later this year.
