A tale of two rate cuts

Lenders reacted very differently to the two cash rate cuts the Reserve Bank announced last month. Following the first cash rate reduction, 70 lenders passed on the full 25 basis point reduction to their variable rate mortgage borrowers.

But following the March 19 rate cut, most of the changes were to fixed rates.

Among the big banks, ANZ was the only one to change its standard variable rate in response to the second RBA move, cutting it by 15 bps.

A handful of other lenders cut their variable rates; they included Australian Military Bank, Auswide, Citi, Hunter United, QBank and Reduce Home Loans.

Commonwealth Bank left its standard variable rate unchanged but cut the rate on one, two and three-year fixed rate home loans by 70 bps to 2.29 per cent.

CBA cut the rate on cash-linked small business loans by 100 bps.

Westpac also left the standard variable rate unchanged. It matched CBA's offer of 2.29 per cent for one, two and three-year fixed rates for owner occupiers paying principal and interest.

It cut variable rates on cash-based small business loans by 100 bps and small business overdraft rates by 200 bps.

NAB left its standard variable rate unchanged cut fixed-term home loan rates by up to 60 bps and small business loan rates by 100 bps.

Many other lenders introduced a range of reduced fixed rate offers. Comparison site Mozo said some notable fixed rate changes included Bendigo and Adelaide Bank cutting rates by up to 140 bps, AMP by up to 138 bps and ME by up to 134 bps.

Mozo said that at the end of the month, the average standard variable rate in its database was 3.5 per cent, down from 3.68 per cent a month earlier.

The lowest variable rate in the market is 2.39 per cent, which Reduce Home Loans is offering.

Mozo said that by the end of the month, the average one-year fixed rate had come down 38 bps to 2.9 per cent, the average two-year rate had come down 32 bps to 2.81 per cent and the average three-year rate had come down 31 bps to 2.68 per cent.

ING, Reduce Home Loans and Well Home Loans are offering one, two and three-year fixed rates of 2.09 per cent - the best fixed rate in the market.