ANZ led the way earlier today as the first major bank to cut its mortgage rates. It was followed in succession by NAB, Commonwealth, and eventually Westpac.
All four banks have pledged to cut their variable mortgage rates by a quarter of a percentage point. Westpac, the last to commit to the cut, will see their home loan rates fall to 7.36% from December 19th, while NAB’s rate falls to 7.22% and remains the lowest rate among the four.
The move ends days of speculation, with banks coming under increasing pressure to pass on the central interest rate cut designed to boost Christmas cheer and stimulate the economy. After accumulating record profits this year, the major banks are predicted to have made (or saved) over $7 million for each day they retained the interest rate cut.
Lisa Gray, of NAB, said that domestic concerns eventually superseded wider global concerns about Europe:
"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."
Treasurer Wayne Swan, himself under pressure after opposition politicians accused him of being ineffectual, praised ANZ’s initiative, and noted that the new home-loan legislation made it inevitable that others would follow suit.
ANZ CEO Philip Chronican, however, described the decision as "one of the most difficult we have made in recent times". Such are the margins for retail banking now, he stated, that bank funding costs are no longer related to the Reserve Bank’s central interest rate.
Home loan rates are set to fall, but are savings rates and credit card rates set to rise? Time to act fast to secure the best deal, here at Which4U.
Ashley King
