Commonwealth Bank, Westpac cut interest rates by 0.25% for home owners

That is for standard variable home loans.

In a statement, Commonwealth Bank today announced it will reduce interest rates on its standard variable home loan account by 0.25 per cent per annum with effect from 13 May 2013.

The new Standard Variable Rate is 6.15 per cent per annum.

Matt Comyn, Group Executive Retail Banking Services said, ”The Commonwealth Bank believes that this is a balanced decision taking into account both domestic and offshore factors.”

The new variable home loan interest rates will be effective for new and existing customers 13 May 2013.

On the other hand, Westpac also announced it will reduce interest rates on its standard variable mortgage rate loans by 0.25% to 6.26% per annum. The new rate takes effect from 20 May 2013.

Customers on Westpac’s Premier Advantage Package who receive a minimum 0.7% package discount on the headline standard variable mortgage will see their new effective rate fall to 5.56% per annum.

The reduction in home loan rates will save homeowners $48 a month or $576 a year in total monthly repayments on an average mortgage of $300,000. Since November 2011, Westpac has cut itsvariable mortgage rates by 1.6 percentage points, which works out to an annual saving of $3,768 on an average home loan.

"This is good news for our home loan customers, which we hope will also provide a timely boost to consumer confidence,” said Jason Yetton, Group Executive of Westpac Retail and Business Banking.

“With headline mortgage rates now at their lowest level for three and a half years, we know this reduction is the kind of incentive our customers are looking for to make the most of the opportunities available in the housing market.”

Mr Yetton said Westpac had taken a balanced approach to today’s decision and considered the total funding costs of the bank.

"Over the past few months we have seen some easing in new wholesale funding but at the same time competition for deposits, which are the main driver of our overall funding costs, remains intense," said Mr Yetton. “Deposits have become increasingly important to us as we reduce our reliance on
other sources of funding to support our lending. The price of deposits remains elevated.” 

Of today’s reduction, Mr Yetton said that the majority of Westpac's mortgage customers would be paying no more than 5.56% per annum thanks to package discounts of 0.7% offered under the bank's award winning Premier Advantage Package. For those customers looking for security and peace of mind Westpac also offers competitively priced fixed rate loan offers.