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Each of the majors will drop variable home loan rates for both new and existing customers off the back of the Reserve Bank’s decision to cut the cash rate by 0.25 per cent.
Now sitting at 4.10 per cent, NAB, Westpac, CBA, and ANZ have dropped rates in line with the call. CBA, Westpac, and ANZ said the variable home loan interest rate cut of 0.25 per cent will come into effect from 28 February, while Westpac's lands 4 March.
Westpac CEO, consumer, Jason Yetton, said: “Today’s decision will be welcome news for mortgage customers. 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.”
CBA has also announced it will be dropping interest rates on business loans in line with the RBA cut.
“Businesses are the lifeblood of Australia’s economy, and they’ve shown remarkable resilience in what has been a challenging environment,” said CBA group executive, business banking, Mike Vacy-Lyle.
“While today’s rate reductions may provide some relief, we recognise some of our business customers are facing challenging times and we have a range of measures available for businesses facing difficulty, such as waiving merchant terminal rental fees and deferring repayments on business loans.”
Non-banks following suit
Among the majors that have dropped rates, so too have some non-banks.
After being on hold since November 2023, it’s refreshing to see some change, said John Flavell, founder and managing director of Wave Money.
“It’s pleasing to see the cash rate ‘high tide’ finally receding after being stuck at 4.35 per cent since November 2023. Our hope is that this is the first of many reductions this year,” Flavell said.
According to Flavell, it’s now up to lenders to pass on the rate cuts to customers, as Wave Money is passing on the full 0.25 per cent from 18 March.
“Unfortunately, over the recent cash rate increase cycle, many lenders compounded borrower struggles by adding margins of 0.4 per cent or more beyond the RBA’s cash rate increases for existing customers, while offering lower rates to attract new ones. We believe it’s time for all lenders to step up and pass on the full benefit of cash rate reductions to every borrower, not just the new ones,” he said.
“We are committed to providing fair value to all borrowers, this means we don’t play games with rates ensuring all customers benefit equally from rate changes.”
Similarly, Bluestone Home Loans is planning to pass on the full 0.25 per cent, effective immediately. Chief commercial officer Tony MacRae said this cut is some much-needed relief for borrowers.
“Whether relief through lower repayments or improved borrowing capacity enabling others to enter the market or refinance, this is a welcome relief for so many borrowers across Australia,” MacRae said.
“I would expect we see at least another couple of movements this year. It’s important to remember ‘just because you can doesn’t mean you should’ and greater borrowing capacity should be tempered with long term affordability and sustainability for the borrower.”
Bluestone will be adding a further 0.25 per cent cut on eligible new applications as part of its 25th-anniversary celebration.
