CBA follows NAB lead

The Commonwealth Bank of Australia has cut its standard variable rate and thrown down the gauntlet to ANZ and Westpac. This morning, CBA announced it would cut 40 basis points from its standard variable rate, taking it to 7.01 per cent – 0.02 per cent higher than National Australia Bank.

Yesterday, NAB announced it would cut 32 basis points from its borrowing rates, taking its standard variable rate to 6.99 per cent. CBA’s rate decision now puts pressure on Westpac and ANZ. It is very unlikely that any lender would look to pass on the rate cut in full to their borrowers. I expected all of the lenders to withhold 10 to 15 basis points of the 0.5 per cent rate cut.

It is just a sign of the market at the moment. It looks like Australia’s second tier lenders will withhold even more. Last night, ING DIRECT announced it would decrease the interest on its variable rate mortgages by 0.3 per cent.


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