UPDATE @ 4.30PM: NAB has announced it will also pass on today’s interest rate cut in full.
The 0.25% will apply to all of NAB’s standard variable home loan rates.
NAB Chief Customer Officer – Consumer Banking, Mike Baird said reduced funding costs have allowed the bank to pass on the full cut.
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“This will save owner-occupier customers making principal and interest repayments on a $400,000 home loan about $62 per month or $744 per year, which will provide more money in household budgets for other expenses at a time when cost of living remains challenging,” Mr Baird said.
“We strongly believe reducing rates is the right thing to do by our customers and reflects our focus on earning trust in the community and rewarding our loyal existing customers.
“NAB is determined to continue supporting our home loan customers by being a bank they can rely on throughout the lifetime of their loan.”
EARLIER @ 3.45PM: Commonwealth Bank has announced it will pass on today’s interest rate cut in full.
CBA will cut variable and interest only loans for both owner occupiers and investors by 0.25% from June 24.
“We have carefully considered the RBA rate decision and the current funding environment, together with how we continue to meet our regulatory commitments, capital requirements, and community expectations,” Angus Sullivan, Group Executive Retail Banking Services said.
EARLIER @ 3.00PM: ANZ Bank has become the first of the banks to pass on the RBA’s cut to interest rates, but not in full.
ANZ will only cut its variable home loan rates by 0.18%, effective from Friday, 14 June.
In a statement, ANZ Group Executive, Australia Retail & Commercial, Mark Hand said: “In making this decision we have weighed up a number of factors, such as business performance, market conditions and the impact on our customers, including our depositors.
“While we recognise some home loan customers will be disappointed, in making this decision we have needed to balance the increased cost in managing our business with our desire to provide customers with the most competitive lending and deposit rates possible.
RACQ Bank has confirmed it will pass on the rate cut in full.
CEO Michelle Bagnall said as a mutual lender, the bank operated for the benefit of its members and passing on the rate cut was the right thing to do.
EARLIER @ 2.30PM: The Reserve Bank has cut interest rates for the first time since August 2016 in an effort to reignite the economy.
The official cash rate has been cut from 1.5% to 1.25%.
The rate cut comes on the back of low inflation and slightly higher unemployment figures.
In a statement following the decision, RBA Governor Philip Lowe said “the Board took this decision to support employment growth and provide greater confidence that inflation will be consistent with the medium-term target.”
“Today’s decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target.”
Experts are predicting at least one more rate, possibly two before the end of the year.
If the rate cut is passed on in full by the banks, it will save those with an average mortgage of $400,000 around $58 a month.
Earlier, Treasurer Josh Frydenberg warned the banks to do the right thing by their customers and pass on any rate cut.
“My message to the banks is that, while they are critical pillars of the economy and especially at a time of domestic and international economic challenges, it was important to maintain the flow of credit to households and businesses,” Mr Frydenberg said.
“The public would rightly expect the benefit of any sustained reduction in funding costs are passed on in full.”
But the RBA’s decision will spell bad news for self-funded retirees and others who rely on interest from their savings.
Today’s interest rate cut follows poor retail trade figures released on Tuesday.
Retail sales were down 0.1% in April, after experts had predicted a rise of 0.2%