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Australia's major banks cut home loan rates after central bank decision

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Australia's major banks cut home loan rates after central bank decision

Three of Australia's four biggest banks passed on the ReserveBank of Australia's rate cut in full, promising to reduce their variable home loanrates by 0.25%.

National AustraliaBank Ltd., CommonwealthBank of Australia and WestpacBanking Corp. said May 3 that they will cut their variable home loanand residential property loan rates by 0.25%. However, another major lender, ,decided to pass a portion of the reduction in the cash rate, citing higher fundingcosts as the reason behind why it will only decrease standard variable home loanrates by 0.19%.

The RBA decidedto cut the cash rate by 25 basis points to 1.75% after lower-than-expected inflationarypressures.

Fred Ohlsson, ANZ's group executive for Australia, explainedthat the bank had absorbed rising wholesale funding costs for some time and thismeans it can only a pass a portion of the reduction in the cash rate to customers.Ohlsson said the bank's rate remains low by historical standards. ANZ's new owner-occupierindex rate will fall to 5.37%.

CBA said its reduction in variable home loan rates, which takeseffect May 20, will allow homeowners to save A$55 a month based on the average mortgageof A$350,000. The bank will also cut its standard variable business rate by 0.25%.

Westpac's new rate takes effect May 23, while NAB's new rateis effective May 16.

As of May 3, US$1 was equivalentto A$1.33.