Australia's big 4 banks slash mortgage costs after RBA rate cut

[SYDNEY] Australia's four biggest banks slashed mortgage rates by 10-14 basis points on Tuesday while lifting rates on term deposits following a quarter-point interest rate cut by the Reserve Bank of Australia (RBA) at its monthly policy meeting.

No 2 lender Commonwealth Bank was the first to move, with a 13 basis point cut to a record low of 5.22 per cent for owner-occupied homes. It reduced rates for small businesses by a similar amount.

National Australia Bank, the country's biggest lender, followed with a 10 basis point cut. It will also reduce its variable rate for business lending products by 10 basis points.

ANZ Banking Group said it was introducing a 12 basis point cut to its variable rates for home loans to a historic low, while Westpac Banking Corp said it would bring in a 14 basis point cut to 5.29 per cent.

The four banks said they would boost deposit rates to attract more savings, helping them reduce dependence on offshore markets where borrowing costs have shot up.

"Today's decision reflects the complex domestic and international environment banks are facing," George Frazis, chief executive of Westpac Consumer Bank, said in a statement.

"In an environment where the cost of funding and deposits are increasing, we have had to balance higher costs, while keeping rates as low as possible for home owners."

Australian banks shares slipped 0.2-0.9 per cent on Tuesday, dragging the benchmark index lower by 0.8 per cent.

REUTERS