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The Reserve Bank's decision to reduce the official cash rate to a record low of 1.50 per cent has sent a flurry of rate cut activity through the banking sector.
Following the RBA’s cash rate call on Tuesday, all of the big four banks have announced that they will cut variable home rates, however, each have passed on only half of the 25 basis point cut.
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Westpac was the last of the majors to cut rates and by the largest amount, announcing it will cut its variable rate by 14 basis points to 5.43 per cent effective from Tuesday 23 August.
The reduction also extends to St. George, Bank of Melbourne and Bank of South Australia which have cut their rates by 14, 13 and 13 basis points respectively.
NAB, ANZ and CBA have passed on cuts of 10, 12 and 13 basis points.
Meanwhile, Bank of Sydney was quick to slash its variable rate to a historic low, reducing its new borrower owner-occupier variable rate by the full 25 basis points.
"This means that the current ‘Broker Special’ variable rate is down to an historic low of 3.54 per cent,” Bank of Sydney head of third-party distribution, Steve Sampson said.
Bank Australia has also announced that it will pass on the 25 basis point cut to its customers, reducing both its premium home loan and investment loan variable rates, effective from Friday 5 August 2016.
Peter Arnold, data insights director at RateCity.com.au commented that variable mortgage holders will be carefully following the banks’ moves.
“The major banks’ decisions are disappointing, and it means that around 80 per cent of all variable home loan customers will miss out on some of the savings,” Mr Arnold remarked.
“The fact that all of the big four banks have decided to pass on just half [of] yesterday’s RBA cut isn’t surprising and proves shareholders are their number one priority now,” he added.
[Related: Big banks react to cash rate call]
