The Reserve Bank’s widely expected 0.25 percentage point cut to the official cash rate – lowering it from 3.85% to 3.6% – is already flowing through to borrowers, with two lenders passing on the reduction within minutes.
Athena and Macquarie Bank were the first to announce full pass-throughs, cutting their best variable rates to 5.49% and 5.44% respectively. Athena said it acted “in just 32 seconds”, while Macquarie will apply the cut on Aug. 15.
They were quickly followed by Australian Unity Bank, whose new best variable will be 5.34% from Aug. 21, and RACQ Bank, which will lower to 5.29% from Aug. 26. Arab Bank Australia also confirmed a full cut to 5.35% from Aug. 26.
Commonwealth Bank was the first of the majors to move, announcing its digital-only variable rate would fall to 5.34% from Aug. 22. Westpac followed, also cutting its digital-only variable rate to 5.34% effective Aug. 26. NAB then announced its cut, effective Aug. 25, and ANZ rounded out the majors with an Aug. 22 start date.
Only Westpac has so far confirmed changes to savings products, lowering its Life account maximum rate by 0.25 percentage points to 4.25% (conditions apply) and trimming the promotional rate on its eSaver account.
CBA is also reducing eligible variable-rate business loans, including BetterBusiness Loans and Business Overdrafts, by 0.25 percentage points from Aug. 22. Pepper Money confirmed the same reduction across variable commercial real estate, construction, and SMSF loans, effective Aug. 28.
Sixteen other non-major lenders – including Teachers Mutual Group, unloan, ING, St. George, BankSA, Bank of Melbourne, and Pepper Money – have also confirmed full pass-through. Many more are expected to follow in the coming weeks.
Sally Tindall (pictured left), Canstar.com.au data insights director, said, “This latest cut will shave another $89 off the monthly repayments for a typical $600,000 mortgage, however, over the three cuts we’ve now had this year, the savings tally up to $272.
“For an average family, that’s a trip around the supermarket or a fair chunk of the winter electricity bill, back into their household budget every single month.
“It’s a relief to see all four big banks announce they’ll be passing on the cut in full to their variable borrowers. However, NAB and Westpac customers could be annoyed they have to wait that little bit longer to get this relief.”
Eleanor Creagh (pictured center), REA Group senior economist, said, “We expect home prices to continue rising in the months ahead, albeit at a more moderate pace than seen in previous easing cycles… Renewed buyer sentiment, supported by earlier rate cuts and the prospect of further reductions is underpinning this recovery.”
Mortgage Choice CEO Anthony Waldron (pictured right) added, “The latest cash rate cut should boost the borrowing capacity of buyers hoping to enter the market this spring… more than 50 per cent of borrowers wish they’d done more homework when choosing their first home loan.”
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
