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.