Lenders confirm they will pass through rate cuts

On Tuesday (18 February), the RBA announced a long-awaited cash rate cut, lowering the rate by 25 bps from 4.35 per cent to 4.10 per cent.

Immediately following the announcement, all four major banks – ANZ, Westpac, National Australia Bank (NAB), and the Commonwealth Bank of Australia (CBA) – said that they would be amending variable rates for borrowers, as have a range of non-major and non-bank lenders, including:

• Athena Home Loans
• Auswide Bank
• Bluestone
• ING
• Macquarie
• Pepper Money
• Resi

ANZ

Variable interest rates across ANZ’s Australian home loans will decrease by 0.25 per cent per annum (p.a.), effective 28 February 2025.

ANZ said it “continues to review other interest and deposit rates”.

ANZ’s group executive for Australia retail, Maile Carnegie, said: “The Reserve Bank’s decision to reduce the cash rate is an important step for our economy and will be welcome news for our borrower customers, providing some long-awaited relief from cost of living pressures.”

CBA

CBA said it would decrease home loan variable interest rates by 0.25 per cent p.a. from 28 February 2025.

CBA’s group executive, retail banking services, Angus Sullivan, said: “We know that cash rate increases have been challenging for our home loan customers and they are looking forward to some relief. After today’s interest rate changes are effective, eligible home loan customers may choose to reduce their mortgage repayments in line with the change to their variable rate via the CommBank app, NetBank, or by messaging us directly.”

It will also reduce interest rates on eligible business lending products (Variable Base Rate, Residential Equity Rate, and Overdraft Reference Rate), by 25 basis points.

This reduction will apply to business lending products, including Better Business Loans and Business Overdrafts., from 28 February 2025.

CBA said it would “continue to offer a range of options for those looking for both at call savings and term deposits” and is maintaining its current 10-month term deposit special of 4.60 per cent p.a. “for a limited time”.

NAB

National Australia Bank (NAB) has also said it will reduce the standard variable home loan interest rate by 0.25 per cent, effective 28 February.

NAB’s group executive, personal bank, Ana Marinkovic, said: “We are very pleased to deliver this rate cut to home loan customers – we understand how tough it’s been for many Australians. The extended period of high interest rates has placed real strain on household budgets and this rate reduction will help to ease the financial burden. We wanted to move quickly after the RBA’s decision to provide customers with certainty.”

NAB said it consistently implements any changes to the standard variable rates after 10 days.

Adam Brown, the executive, broker distribution at NAB, said: “This week’s rate cut shows the RBA is confident that inflation is coming under control, and our economy is in good shape.

“These cuts will provide welcome relief to households and will help many buyers increase their borrowing power. At the same time, housing affordability and supply are long-term challenges. We’re optimistic about the year ahead and believe the changes we’re seeing strongly reinforce the vital role that brokers play in helping customers navigate the home loan market.”

Westpac

Westpac has also announced interest rate changes for home loan and deposit customers following the cash rate reduction.

Westpac will decrease home loan variable interest rates by 0.25 per cent p.a. for new and existing customers, effective 4 March.

Similarly, savings account rates will also change. The Westpac Life total variable rate with bonus interest will decrease by 0.25 per cent p.a. (to 4.75 per cent p.a.), effective 28 February, while Westpac eSaver total variable rate with a five-month introductory rate will decrease by 0.25 per cent p.a. (to 4.75 per cent p.a.) for new customers applying online, effective 28 February.

Speaking about the change, Westpac’s CEO, consumer, Jason Yetton, said: “Today’s decision will be welcome news for mortgage customers. By reducing the standard variable home loan rate by 0.25 per cent per annum, customers will save an extra $90 per month, or $1,080 per year, based on a $500,000 home loan with principal and interest repayments.

“Customers could use this as an opportunity to get ahead on their mortgage by putting the extra savings into their mortgage repayments, or into their offset account to help reduce the interest on their loan.”

Westpac also this week introduced the option for eligible home loan customers to set up multiple offset accounts with no additional fee, providing more choice and control in how they manage their finances.

More lenders confirm pass-through

Outside of the four largest lenders in Australia, several other players have confirmed they will pass through the full 25-bp reduction to borrowers.

Auswide Bank said it will decrease interest rates on existing home and business loans by 25 basis points from 28 February 2025. Pricing for new home loans and credit cards "remains under review", it said.

Macquarie Bank (Macquarie) will be decreasing its variable home loan reference rates from 28 February 2025.

Ben Perham, the head of personal banking at Macquarie Bank, said: “With mortgage brokers voting us the best lender for the past five years and savers responding positively to our no 'hoops or catches' everyday banking savings accounts, we’re confident our offering will continue to resonate strongly with customers across Australia.”

ING Australia has announced all existing customers with a variable interest rate home loan product will see their rates drop from 4 March 2025.

Several non-banks also rapidly announced rate changes. Athena Home Loans reduced its variable rates, effective immediately, on its products - including those written through its white-label partnerships (Mortgage Choice Freedom and Apollo by LMG).

Athena co-founder and CEO Nathan Walsh commented: "The anticipation surrounding this rate decision has been felt by all Aussie home loaners. At a time when the cost of living crisis continues to bite, acting swiftly to bring some relief has to be a priority for all lenders – and it certainly is for Athena."

The non-bank lender noted that the delay in passing through rate cuts to borrowers (typically between 10 days to two weeks) can cost borrowers approximately $115 million in excess interest*.

Bluestone Home Loans said it would reduce variable home loan interest rates by 0.25 per cent per annum for new applications and scheduled settlements on all Bluestone products, effective immediately.

This reduction is in addition to Bluestone’s existing 0.25 per cent p.a. interest rate discount on eligible new applications, which it said gave brokers “more opportunity to support their clients with greater affordability and improved serviceability”.

“By passing on the full RBA cut and keeping our discount offer in place, we’re making homeownership more accessible and giving brokers the tools to support their clients,” said Bluestone CEO Mark Jones.

“Following our recent refresh, this is just another way we are thanking our broker network and is a reflection of our commitment to financial inclusion and flexibility. We’ve built our business on backing brokers and their client’s unique circumstances, and today’s move reinforces that,” Tony MacRae, Bluestone’s CCO said.

Similarly, Pepper Money will be decreasing the variable interest rate for existing residential, commercial, construction, and SMSF loans by 25 basis points, effective 5 March 2025.

Pepper Money CEO Mario Rehayem said: "Many households have been managing tight budgets amid rising costs, and any reduction in repayments can make a meaningful difference. Ensuring borrowers benefit from this cut will help them regain some financial stability and confidence in their future planning.

“For mortgage brokers, now is the time to engage with clients and review their current loan. It’s important for brokers to be proactive and reach out to existing customers, help them understand what this rate cut means for them, and conduct home loan health checks to ensure they’re on the best possible rate,” Rehayem advised.

Mortgage lender Resi also said it will be passing on the full rate reduction for both new customers (from 19 February) and existing Essential Options borrowers (from 28 February).

*Calculated using APRA’s Dec publication of Monthly Authorised Deposit-taking Institution Statistics. The residential mortgage portfolio size across the major banks was $1.693 trillion. A 10 day delay to pass on a 25bps rate cut results in an estimated extra $115m in interest.

[Related: RBA cuts cash rate for first time in four years]