Australia's four major banks all moved today on their lending rates, with the ANZ making the largest cut, of 25 basis points, but National Ausralia Bank continuing to be the market leader with the lowest home loan rate.
NAB was the last of the big four to announce a move, cutting its standard housing and business lending rates by 21 basis points. That will take its standard variable housing loan rate to 6.78 per cent, the lowest of the big four.
NAB said it had offered the lowest standard variable rate of the major banks for 35 months and was delivering on its commitment to remain the lowest of the majors for the rest of 2012.
Earlier this afternoon, Westpac cut its standard mortgage rate by 20 basis points to 6.89 per cent - the highest of the major banks.
The Commonwealth said it would drop its rate by 21 basis points, to 6.80 per cent.
ANZ was first to announce a move, cutting its home loan rate by 25 basis points earlier today; that will put its lending rate on a par with the Commopnwealth at 6.80 per cent.
All four moved after the Reserve Bank of Australia's 25 basis point cut to the cash rate on Tuesday.
Westpac also said it would cuts its variable business loans by 25 basis points.
"This has been a difficult decision as we have sought to balance the needs of our mortgage customers with those of our millions of savers, particularly retirees who depend on the income from their deposit accounts," Westpac executive of retail and business banking Jason Yetton said in a statement.
"We also fully appreciate the financial pressures that many households are currently facing even though the economy as a whole is doing well as the latest GDP and job figures released this week showed."
He said the price of deposits for the banks had come down in recent weeks, but remained high due to intense competition for deposits.
"This has been great news for savers but it has meant increased pressure on banks when we consider borrowing rates," Mr Yetton said.
The cost of sourcing funds from overseas had recently spiked due to the latest instability in Europe, he said.
Treasurer Wayne Swan said ANZ's decision it was "really good news" for the bank's customers.
"It's great news that ANZ has decided to give its customers a fair go with this decision," he said in a statement.
"This morning, ANZ really threw down the gauntlet to the other banks to do the right thing or risk seeing their customers walk out the door."
ANZ's interest rate decision was a departure from its normal policy of linking lending rates to funding costs.
"Funding costs remain elevated as a result of the deteriorating economic situation in Europe and strong competition for deposits," ANZ Australia chief executive Philip Chronican said in a statement.
"We are, however, pleased to be in a position to reduce rates by 0.25 (percentage points) this month."
"This decision recognises that, although we need to be realistic about funding costs and the challenges the global economic situation is presenting, ANZ also needs to absorb its share of the burden.
"Hopefully, this decision will help relieve some of the pressures that we know homeowners and small businesses are facing at present."
