Westpac's Big Three Rivals Follow In The Rate-cut Stakes

The Age

Saturday March 27, 1993

DEBORAH BREWSTER

Three big banks _ ANZ, Commonwealth and National Australia _ yesterday followed the lead of Westpac and cut their business and home loan rates by half a percentage point.

The banks passed the cut on to home loans as well as business borrowers despite the Reserve Bank's call for them to give preference to business loans.

The Reserve on Tuesday cut official interest rates to 5.25 per cent from 5.75 per cent.

The Reserve Bank governor, Mr Bernie Fraser, urged the banks to give priority to reducing lending rates to business, saying lower rates for business would improve cash flows and ``make some contribution to encouraging investment".

Statements from all three banks yesterday opened by announcing their rate cut for business, but quickly followed with the good news for home borrowers.

Earlier this week all three banks cited competitive pressure in the booming home loan market and insufficient demand from business as reasons that they were unlikely to cut business rates and leave home rates alone.

Westpac was the first bank to act on the Reserve rate cut, announcing on the same day its reduction for home and business borrowers.

The Commonwealth yesterday cut its corporate overdraft and loan reference rate to 9.5per cent, from 10per cent, and overdraft and loan index rates for commercial customers to 10per cent.

Home loans were cut to 9.5per cent and credit card rates reduced to 19.9per cent, with all cuts to take effect from 3 May.

The ANZ's reference rate will also fall to 9.5per cent and the index rate to 9.75per cent from 27 April. Its home loan rate will drop to 9.5 per cent from 6 May, and its Visa credit card rate drops to 20.5 per cent from 31 May.

The NAB lowered its base indicator rate for business loans to 9.7 per cent and its home loan rate to 9.5 per cent from 26 April. Its benchmark rate, which applies to big corporate borrowers, will drop to 9.5 per cent from 29 March.

Two smaller banks _ St George and Advance _ also reduced their variable home loan rates yesterday to 9.5 per cent, both effective from 1 May. Advance reduced its commercial indicator rate to nine per cent from 1 April.

The Deutsche Bank cut its prime rate to 9.5 per cent from 10.25 per cent, and the R and I cut both home loan and business rates to 9.5 per cent.