Banking & Saving - Lower Interest rate campaign begins

Aussie Home Loans and NAB have followed the trend recently set to cut interest rates, which came after ANZ changed its rates independent of the Reserve Bank for the first time in over ten years.

Aussie Home Loans and NAB have followed the trend recently set to cut interest rates, which came after ANZ changed its rates independent of the Reserve Bank for the first time in over ten years.

NAB cut its standard variable home loan rate yesterday by 20 basis points to 8.36%.

The bank said in a statement that the 0.2 per cent cut also applies to business loans. Some fixed home loans rates will also be cut by 0.3 per cent.

NAB's one-year fixed home loans has already been cut by 0.3% to 6.99%.

This came after the Aussie's decision on Saturday to cut its rate on variable home loans by 0.3% for first time buyers to 7.79%.

ANZ lowered its standard variable home loan interest rate by 25 basis points to 8.32% for both new and existing customers, which will come into effect October 27.

NAB spokesman Ahmed Fahour said policy measures taken this month by the Federal Government have had a positive affect on the credit sector, allowing the bank's funding costs to drop.

"We welcome this new development and anticipate we will see some relief in the significantly higher premium we are currently paying for wholesale funds. Should this be the case, then we hope we can pass on further interest rate cuts to our customers." he said.

Westpac and Commonwealth banks have also said they were reassessing rates.

Research shows the ease in rates was long overdue for families who have continued to struggle to deal with the twelve consecutive rises in rates.

ING Direct has recently released a report showing that a fifth of South Australians believe past rises in rates have led to relationship problems.

35% said it had put more pressure on the family and 17% had considered selling their home.

The quarterly report carried out between October 8^th and 13^th surveyed 240 South Australian mortgage holders.

It was performed a day after the Reserve Bank dropped the cash rate by 1% to 6%.

With living and house prices rocketing, the study carried out by ING showed 50% of South Australians were unwilling to up their mortgage payments. Instead, some used their savings to pay bills, buy necessities and pay off debts.

Around one in five of the group surveyed used credit cards to cope with rate rises. A further 15% worked longer hours and 39% cut back on luxuries in order to meet higher repayments.

However, the study also showed that 10% of South Australians now felt they were in a better financial position, allowing them to plan for a holiday, baby or new car and 10% felt more confident about being able to hold onto their home.

ING Direct executive director Brett Morgan said confidence was increasing.

"Home owners were very cautious with the first cut, reluctant or unable to spend it on themselves. The October rate cut appears to have given mortgage holders more breathing space with their finances," he said.

Published by Sam Gooch