Westpac has cut its standard variable home loan rate by 37 basis points to 7.09 per cent, deciding not to pass on the full half percentage point by the RBA.
Its variable rate on business loans has been cut by 50 basis points.
Westpac group executive retail and business banking Jason Yetton downplayed the influence of the RBA's rate cut in the bank making the decision.
“It is now widely acknowledged that the link between the RBA’s cash rate and the actual cost of money to banks – in effect our own borrowing costs – plays an increasingly small role," he said. "Other ones, such as the relatively high cost of deposits and wholesale funding, have assumed critical importance,” said Mr Yetton.
“In particular, the price of deposits including term deposits has a major impact on our decision making."
More banks cut
Westpac is the third of the four major banks to announce their mortgage rate cuts after the Reserve Bank surprised the households by slashing 50 basis point from the cash rate on Tuesday.
Bendigo and Adelaide Bank this afternoon also unveiled plans to keep back some of the RBA's cut. The bank will cut its standard variable home loan 35 basis points to 7.10 per cent - but not until May 21.
A short time later, Bank of Melbourne moved to tackle National Australia Bank claim of being the lowest cost of the major banks matching the rival lender’s mortgage rate.
Bank of Melbourne cut its variable mortgage 41 basis point to 6.99 per cent.
Westpac owned St George Bank this evening announced it will reduce its standard variable home loan rate by 38 basis points to 7.04 per cent, effective May 14.
ANZ last to go
Customers of ANZ have to wait until next Friday to learn where the cost on its standard variable rate mortgage is headed, in keeping with ANZ's controversial independent pricing strategy.
Commonwealth Bank dropped its standard variable rate by 40 basis points to 7.01 per cent yesterday. On Wednesday, National Australia Bank lowered their mortgage rate by 32 basis points to 6.99 per cent.
The suspense around the big four's mortgage rate pricing has been blamed for adding to the uncertainty of consumers, who have in turn curtailed spending and borrowing.
The RBA cut official rates to 3.75 per cent from 4.25 per cent this week after the economy showed continued weakness and its preferred inflation gauge sank to its lowest since 2000.