Wave of rate cuts begins

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Major and second tier banks have continued to respond to this week's RBA rate cut by dropping standard variable rates.

Westpac and Commonwealth Bank were the first to move, with both banks cutting 25bps from their rates, in line with the RBA move. ING Direct, AMP Bank and Suncorp have each followed the moves with their own 25bp cuts.

ING Direct's cut will bring the rate on its Mortgage Simplifier product to 6.87%, while Suncorp has cut its package product to 6.55%, with a 1.03% discount off the standard variable rate for the life of the loan. The bank also cut its three-year fixed rate to 6.20%. AMP Bank dropped its standard variable rate to 7.57%, bringing the discounted rate on its Essential Home Loan to 6.60%.

ANZ followed its big four rivals with a 25bp cut. NAB, however, managed to stir controversy by passing on only 20bps of the RBA cut. The move reportedly drew the ire of Treasurer Wayne Swan. Fairfax reported that Swan called the move "a kick in the guts to working families", and Westpac CEO Gail Kelly claimed there was "no reason" for a partial cut.

NAB chief executive Cameron Clyne argued that the bank still had the lowest standard variable rate among the majors.

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