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All four big banks have now cut home loan interest rates

05 Nov 2008 6:51 PM
All four big banks have now cut home loan interest rates

By Trevor Chappell

MELBOURNE, Nov 5 AAP - All of Australia's big four banks have moved to reduce their variable home loan interest rates, with Westpac, ANZ and National Australia Bank (NAB) announcing cuts today.

Commonwealth Bank of Australia announced its rate reduction yesterday.

However, none of the banks are ready yet to pass on in full this week's 75 basis point cut in the overnight cash rate by the Reserve Bank of Australia(RBA), citing substantially higher funding costs.

Westpac said today it would cut its standard variable mortgage rate by 65 basis points to 7.71 per cent, effective from November 10.

Westpac will also reduce interest rates on consumer credit cards and business credit cards as much as 80 basis points, from 14 November.

NAB cut its variable mortgage interest rate by 62 basis points to 7.74 per cent per annum.

NAB also cut its One Year Intro fixed rate by 100 basis points to 5.99 per cent.

ANZ will lower the rate for its standard variable home loan by 58 basis points to 7.74 per cent per annum, effective 14 November.

ANZ will also reduce interest rates for credit cards and personal loans by up to 75 basis points, effective 14 November.

CBA said yesterday it would lower its variable home loan interest rates by 58 basis points.

AMP Banking said today it would cut its standard variable home loan interest rate by 75 basis points to 7.87 per cent per annum, in line with the RBA cut.

The new rate will be effective 16 November for new customers and 17 November for existing customers.

Westpac group executive, retail and business banking, Peter Hanlon, said Westpac was sensitive to the challenges being faced by many working families.

"However, we are still having to meet substantially higher funding costs," Mr Hanlon said.

The bank said small business owners in particular would benefit from reduced credit card interest rates.

NAB executive director and chief executive for Australia, Ahmed Fahour, said the federal government's guarantee of wholesale funding and domestic deposits had boosted confidence in the market.

"However, the underlying problem our financial system has consistently faced over many decades remains," Mr Fahour said.

"Australia's savings gap means we are reliant on borrowing money from offshore wholesale markets, which are still frozen and very expensive.

"This imbalance is putting pressure on all banks' funding costs, and at NABwe continue to monitor this closely to ensure we are being balanced in ourpricing decisions.

"NAB is committed to passing on lower rates as much as it can to customers as these markets improve and banks' funding costs fall."

ANZ chief executive, Australia, Brian Hartzer said ANZ understood the current economic environment was placing a strain on many households.

"As market conditions allow, we will continue to pass on further reductionsin funding costs to our customers," Mr Hartzer said.

Federal Treasurer Wayne Swan has urged banks to think of their customers and pass on the latest official interest rate cut in full.

Mr Swan said the retail banks had benefited from the certainty provided by the federal government's move to guarantee deposits.

He said the banks had been told they could return the favour by passing on interest rate cuts in full.

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