The downgrade of the official cash rate by 25 basis points to 1.5 per cent is the first move by the RBA since August 2016.
Here’s how the lending market in Australia reacted.
The CBA will reduce the following loans by 0.25 per cent. Its new rates will take effect from 25 June, and apply to standard variable, owner-occupied interest-only, investor principal and interest and investor interest-only.
NAB also announced a 25 basis point cut to its interest rates following the RBA’s announcement, effective 14 June. The cuts apply to owner-occupied principal and interest, investor principal and interest, owner-occupied interest-only and investor interest-only.
ANZ has not passed on the full rate cut. However, it has announced a decrease in all of its variable interest rate home loans by 18 basis points. These reductions will be applicable from 14 June.
The last of the big four banks to announce a rate cut, Westpac will pass on a savings of 20 basis points to its standard variable rate. However, this is 0.05 per cent less than the Reserve Bank was hoping when it announced a 25 point basis cut.
Lenders which cut rates early
ING cut its rates last Tuesday by 17 basis points, meaning it has not passed on the full rate cut. The reductions apply to its Orange Advantage and Mortgage Simplifier products.
BOQ Group has announced a number of fixed rate cuts across its BOQ, Virgin Money and BOZ Specialist brands. This includes:
- Two-year owner-occupied principal and interest fixed rates have been cut to 3.44 per cent, representing a 15 basis points decrease for BOQ and a 31 basis points decrease for Virgin Money.
- Three-year owner-occupied principal and interest fixed rate have been cut to 3.39 per cent, representing a 30 basis points decrease for both BOQ and Virgin Money
BOQ rates are effective from Friday, 31 May.
Bank SA has announced a 15 basis point cut to its fixed mortgage for two years and a 16 basis point cut for its three-year loan.
For residential investment standard rate mortgages, the following cuts apply:
- Two-year principal and interest fixed rates have been cut by 5 basis points, from 4.09 per cent to 4.04 per cent (5.72 per cent comparison rate)
- Three-year principal and interest fixed rates have been cut by 20 basis points, from 4.34 per cent to 4.14 per cent (5.59 per cent comparison rate)
- Three-year interest-only fixed rates have been cut by 25 basis points, from 4.69 per cent to 4.44 per cent (6.06 per cent comparison rate)
The rate is effective as of Wednesday, 29 May.
Greater Bank has cut its one-year fixed home loan by 50 basis points, making it the first lender to have rates under 3 per cent.
The rate is effective as of Monday, 3 June.
Cameron Micallef is a journalist at Nest Egg, writing primarily about personal wealth and economic markets.
Prior to this, Cameron worked for Australian Associated Press. He graduated from the University of Wollongong with a double degree in communications and commerce.