CBA fails to pass on full rate cut to borrowers

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The Commonwealth Bank is only passing on part of Tuesday's cut in official rates to home loan customers, but has taken the unusual step of raising some deposit interest rates.

The country's biggest bank on Tuesday said it would lower its standard variable mortgage rates by 0.20 percentage points to 5.45 per cent, compared with the Reserve Bank's 0.25 percentage point cut in official rates.

At the same time, CBA said it would increase the rates paid on 8 month term deposits by 0.55 percentage points to 3.05 per cent.

It will also nudge up rates on one of its bonus savings accounts by 0.05 percentage points to 3.05 per cent.

CBA's group executive for retail banking, Matt Comyn, said the bank had considered the needs of deposit customers as well as borrowers in its decision.

"Lifting the rates for our deposit customers at a time when the cash rate is decreasing recognises the importance of savings income, particularly for retirees and young people."

The CBA move comes after ANZ earlier said it would lower its standard variable home loan rate by 0.25 percentage points to 5.38 per cent, effective this Friday.

The chief executive of ANZ Australia, Mark Whelan, said: "We hope by announcing this decision today we're able to provide certainty for our customers looking to manage their household budgets as well as playing our part in supporting the broader economy."

Late on Tuesday ME Bank also announced it would pass on the RBA cut in full, dropping its standard home loan variable interest rate to 4.88 per cent.

National Australia Bank and Westpac's interest rates are under review.

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