07/10/2008 - 13:01

Major banks cut rates by 80 basis points

07/10/2008 - 13:01

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Australia's four major banks have today announced they would pass on most of the Reserve Bank of Australia's stunning 100 basis point cut.

Major banks cut rates by 80 basis points

Australia's four major banks have today announced they would pass on most of the Reserve Bank of Australia's stunning 100 basis point cut.

The RBA surprised the market today with a 1 per cent cut to the overnight cash rate to 6 per cent, effective from tomorrow.

Westpac Banking Corporation was the first of the three to reduce its standard variable home loan rate by 80 basis points to 8.56 per cent, which will come into effect from October 13.

The move was followed by Australia's biggest mortgage lender Commonwealth Bank of Australia Ltd, which reduced its standard variable home loan rate by 80 basis points to 8.53 per cent.

CBA's rate cut will also come into effect from, the Sydney-based bank said in a statement. CBA also cut its basic variable rate to 8.02 per cent.

"We value our customers and are reducing rates as much as possible today given our current very high wholesale and offshore funding costs," CBA group executive retail banking services Ross McEwan said in the statement.

"While we are not reducing our variable home loan rates by as much as the RBA reduction, we do expect global financial markets to normalise over time and once that does occur we will be able to reduce rates by more than the RBA adjustments.

"Our customers can also expect out-of-cycle interest rate reductions."

National Australia Bank Ltd also reduced its standard variable home loan rate by 80 basis points to 8.56 per cent. The new rate comes into effect from October 20.

Meanwhile ANZ has just announced it would cut its standard variable home loan rate by 80 basis points to 8.57 per cent, taking effect from October 13.

All four banks passed on all of the RBA's 25 basis point rate cut last month.

It was the biggest cut to the overnight rate by the RBA since May 1992.

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