The Reserve Bank of Australia (RBA) has cut the cash rate by 25 basis points for the first time in five years in February, bringing it down to 4.10% - the lowest it's been since October 2023.
The cut was widely anticipated with market expectations at 90% after soft Q4 inflation numbers.
Economists from each of the big four banks concurred an interest rate cut was the most likely outcome, and were pretty quick off the mark to pass on the cuts in full.
Here's how each of the big four banks has responded.
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Westpac rate cut
Westpac wasted no time, charging out of the gates to pass on the rate cut in full less than a minute after the RBA’s decision dropped.
Effective 4 March, the bank will cut variable home loan interest rates by 0.25% p.a. for both new and existing customers.
“Today’s decision will be welcome news for mortgage customers," said Westpac Chief Executive, Consumer, Jason Yetton.
"By reducing the standard variable home loan rate by 0.25 per cent per annum, customers will save an extra $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."
Westpac isn’t just trimming home loan rates - savers will feel the pinch too. The bank announced it will also cut interest rates on its savings accounts by 25 basis points.
From 28 February, the Westpac Life total variable rate (including bonus interest) will drop to 4.75% p.a., while the Westpac eSaver total variable rate - available with a five-month introductory offer for new customers applying online - will also fall to 4.75% p.a.
Commonwealth Bank
CBA also jumped on board, passing the full rate cut to its variable home loan customers, with the savings set to kick in from 28 February.
“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.
“We recognise some customers will continue to need support as they manage household budgets. We strongly encourage anyone who is experiencing hardship to contact us, so we can help with a solution that suits their circumstances.
“We are committed to ensuring our customers have the right tools, support and advice as they navigate this change. After today’s interest rate changes are effective, eligible home loan customers may choose to reduce their mortgage repayments in line with the change to their variable rate via the CommBank app, NetBank, or by messaging us directly."
NAB
NAB will also cut its standard variable home loan interest rate by 0.25%, with the cut kicking in on 28 February.
“We’re pleased to pass on this rate cut to our home loan customers, recognizing how challenging the past months have been for many Australians," said NAB Group Executive, Personal Bank, Ana Marinkovic.
“The prolonged period of high interest rates has added pressure to household budgets, and this reduction will help alleviate some of that financial strain.
“We wanted to act swiftly after the RBA’s decision to give our customers greater certainty.”
ANZ
Bringing up the rear, ANZ was the last of the big four to join the pack, confirming it will pass on the full rate cut to variable home loan customers from 28 February.
ANZ Group Executive Australia Retail, Maile Carnegie, said the move would bring much-needed relief to borrowers.
“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.
“We’re concious that interest rates for borrowers remain high. While our data indicates that our customers are generally faring well, some will still be facing challenges. We urge them to reach out sooner rather than later to discuss options for any additional support required and we are committed to providing tailored solutions to ease financial strain, for both personal and business needs.
“Every dollar counts, so I encourage customers who’d like to learn more about what this rate change means for them to contact us and undertake a free home loan check-in.”
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