| 09.12,11. 03:12 AM |
Westpac finally moves on rates cut
December 08, 2011
WESTPAC has become the last of the big four banks to pass on in full the official cut in interest rates by the central bank.
Late today Westpac said that it would cut its standard variable home loan and business rate by a quarter of a percentage point.
It said this would save a customer with an average mortgage of $300,000 about $51 a month.
The new variable mortgage rate will be 7.36 per cent, effective from December 19.
The Reserve Bank of Australia cut its cash rate to 4.25 per cent from 4.50 per cent on Tuesday, citing the deteriorating world economic outlook.
Earlier today, ANZ was the first of the big four to cut its variable mortgage rate by a quarter of a percentage point.
It was followed on the day by National Australia Bank and then Commonwealth Bank, which both cut by the same amount.
THE Commonwealth Bank will pass on the interest rates cut after the NAB and ANZ already agreed to cut rates by 25 basis points, in line with the RBA.
National Australia Bank this afternoon followed ANZ by passing on the full central bank rate cut to home loan and business borrowers.
The bank said that it would reduce its standard variable home loan rate by 0.25 percentage points to 7.22 per cent, making it the lowest rate among the big four banks.
"This has been a difficult decision, where we have had to weigh the concerns of our customers and the community with the rising cost of funds," Lisa Gray, group executive NAB Personal Banking, said.
Check out the counter on our homepage showing how much the banks save for every minute without a rate cut.
"While we continue to be concerned about uncertainty in Europe and the impact on increased funding costs, our view is that it is important to put money back in the hands of our customers and assist with supporting the Australian economy this Christmas."
In a statement released this earlier afternoon, ANZ said it would reduce its interest rates for mortgages and small business lending by the full 0.25 percentage points.
ANZ CEO Australia, Philip Chronican described the bank's decision in the face of the current economic and banking crisis facing Europe as "one of the most difficult we have made in recent times."
"Retail banking margins have been contracting as the cost of funds has progressively risen over the last six months," Mr Chronican said.
"Bank funding costs are now largely unrelated to movements in the Reserve Bank's official cash rate.''
In a bold move, the bank also announced changes in announcing future pricing policy. Instead of an immediate reaction to decisions made by the Reserve Bank, ANZ said it would "announce future pricing changes for retail and small business variable interest rates on the second Friday of each month.''
Treasurer Wayne Swan says the ANZ Bank has done the right thing by its customers.
Mr Swan said ANZ customers could breathe a sigh of relief while the heat was now on the Commonwealth Bank and Westpac to follow suit.
"Australian families and small businesses are asking for nothing more than a fair go, at a time when bank profits are huge and family budgets are stretched," he said in a brief statement.
Mr Swan added that new government legislation would assist consumers.
"So if Westpac and CBA don't do the right thing, we've made it much easier for their customers to walk down the road and get a better deal elsewhere,'' he said.