Commonwealth Bank cuts 40bp from borrowing rates
Commonwealth Bank … Borrowing rates to drop 40 basis points, but deposit rates remain “under review”. Photo: Jessica Shapiro
Commonwealth Bank will lower its standard variable interest rate by 40 basis points – joining National Australia Bank in holding back some of the Reserve Bank’s 50 basis-point cut earlier this week.
Standard variable rate loans at CBA drop to 7.01 per cent, effective from Friday, May 11. Notably, the bank did not reveal its rate changes for deposits, saying those rates remain under review.
Today’s CBA move outpoints NAB, which yesterday cut 32 basis from its borrowing rates. Westpac and ANZ are yet to announce their decisions, with ANZ delaying its decision until next Friday.
“In making this decision, the group has continued to balance the interests of its 1.8 million home loan borrowers with those of its 11 million depositors,” CBA said in a statement.
The lending rate move leaves the bank’s standard variable rate 2 basis points higher than National Australia Bank’s standard variable rate of 6.99 per cent.
The RBA on Tuesday slashed its official cash rate by 50 basis points to 3.75 per cent in a bid to spur the faltering economy. The size of the central bank’s cut was interpreted by commentators as giving the big four banks scope to retain more of their margin when trimming their mortgage rates.
A 40 basis-point cut on a standard 25 year, $300,000 variable rate mortgage would trim the monthly repayments by $81 to $1,998, according to RateCity.
Deposit rates
While NAB lowered its borrowing rates by 32 basis points, the bank cut its deposit rates by the full 50 basis points.
Commonwealth Bank said this morning that its deposit rates “remained under review” but no changes had been made to them in conjunction with today’s mortgage rate announcement.
Today’s announcement from the CBA comes as Westpac posted a bumper first-half profit as it and ANZ consider how much of this week’s official interest rate cut to pass on to customers.
Westpac’s first-half cash profit came in at $3.195 billion, up 1 per cent from a year earlier, and slightly more than the $3.12 billion profit expected by analysts.
Westpac will reveal its interest rate plans on Friday, chief executive Gail Kelly said today.
The Westpac result followed a day after ANZ Bank reported first-half underlying profit of just under $3 billion, a bumper result that added pressure on the bank to pass on in full the RBA’s official interest rate cut.
czappone@theage.com.au
Life is short,have fun!!! 