Westpac has joined the Commonwealth Bank and the National Australia Bank in reducing its standard variable rate by 0.20 percentage points, the third of the big banks to make a move following yesterday's Reserve Bank decision to cut the cash rate by 25 basis points.
Westpac's new standard variable rate now stands at 6.51 per cent. CBA's new standard variable rate - 6.4 per cent - would be effective from December 10, CBA said. NAB's new rate of 6.38 per cent would also be effective from the same day.
ANZ is sticking with its tradition to not announce its decision until the second Friday of each month.
NAB cuts its standard mortgage rate to 6.38%. Photo: Glenn Hunt
Mortgage holders have been waiting to find out if the big four banks would pass on the Reserve Bank's full rate cut, as the financial institutions' lobby group said they were delaying their decisions to remain competitive.
UBank, NAB's internet-based subsidiary, followed shortly after, cutting its home loan rate by 20 basis points to 5.27 per cent.
CBA, Australia's biggest mortgage lender, said it has continued to balance the needs of 1.8 million home loan borrowers with those of its 11 million depositors and its shareholders.
"A significant factor impacting this balancing of needs has been the increased competition in the domestic deposit market which has benefited many customers, including those who rely on interest earnings to meet their living expenses," the banks said in a statement.
NAB's group executive for personal banking, Lisa Gray, said in a statement that the bank wanted to strike the right balance between the cost of funding and offering competitive rates to customers.
"NAB has offered the lowest standard variable home loan rate of the major banks for 41 months and our track record of being competitive speaks for itself," she said in a statement.
"The impact of deposit and wholesale funding costs remain high, resulting from instability in the global economy and low confidence domestically."
Yesterday, only two banks announced their response to the RBA's decision. The Bank of Queensland passed on 20 points and ING Direct passed on the full 25 points.
"They are sitting there at the moment desperately wishing their competitors show their hand first so they can undercut," Australian Bankers Association chief executive Steve Munchenberg told the ABC this morning.
He said the banks wanted to protect their market share and win new customers.
In October following the RBA's 0.25 point cut to the cash rate, the Commonwealth Bank, ANZ and National Australia Bank passed on 0.20 points while Westpac passed on 0.18 points.
Federal Treasurer Wayne Swan said he had one message for banks considering rate cuts.
"Do the right thing by your customers. The fact is, the NAB shouldn’t take their customers for a ride," Mr Swan said following NAB's announcement. He heaped praise on ING Direct for passing on the RBA's cut in full.
Standard variable rates
ANZ 6.60 per cent
Commonwealth 6.40 per cent*
NAB 6.38 per cent*
Westpac 6.51 per cent*
*NAB's reduced rate will be effective from December 10. It is currently 6.58 per cent. Commonwealth's reduced rate will be effective from December 10. It is currently 6.6 per cent. Westpac's current rate is at 6.71 per cent.