The Reserve Bank has cut official interest rates by 25 basis points to a fresh record low of 2 per cent, a move which Treasurer Joe Hockey says should stimulate the “green shoots” of the economy.
If passed on in full, the move would save a borrower with a $300,000 mortgage around $47 per month in repayments.
ANZ was the first major bank to pass on the rate cut, lowering its standard variable mortgage rate by 25 basis points to 5.38 per cent, effective this Friday.
The Commonwealth Bank has elected to pass on only 20 basis points of the 25-basis-point cut to its standard variable home loan rate, taking it to 5.45 per cent from Wednesday May 13.
CBA has justified the move by saying that it is actually increasing, rather than cutting, deposit rates, by between 5 and 55 basis points. It has also lowered real estate secured small business loan rates by 25 basis points.
Interest rate monitoring firm RateCity says the lowest-rate discount variable home loans should now drop below 4 per cent for the first time on record.
The majority of economists say they expect the bank to hold off on any more cuts for the rest of the year.
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