CUA cuts variable rates 24 March 2010 6:06PM Jason Bryce A second niche lender with national ambitions has cut its interest rates on variable rate home loans. Credit Union Australia has cut rates on its standard variable mortgage for new customers by 0.25 per cent to 6.37 per cent.National Australia Bank's standard variable rate, which is the cheapest of the major banks, is 0.37 percentage points higher than that at 6.74 per cent, while the most expensive of the big four, Westpac, is at 7.01 per cent. The RBA's cash rate is 4.0 per cent.AMP cut its basic and discounted variable rates earlier this week as well.Andrew Hadley, head of strategy at Credit Union Australia, said this was just one of a number of new retail initiatives to come this year from CUA as it seeks to compete with the big banks. "We are a market leader in terms of customer service;now this move ensures that our value proposition stacks up as well." Hadley says CUA mortgage applications are typically processed within 48 to 72 hours. He is confident that those standards can be maintained even if this rate cut generates more demand. "We are ahead of the banks on service standards; I'm confident we can meet any rise in demand that comes from this initiative; we want to bring some competition back to banking." While Hadley couldn't say whether this rate discount would be permanent, he did think that it was affordable and could be sustained. The new rate ensures that CUA's headline rate for new business aligns with the rate many of its long-term customers are already getting. "We have enough margin to do this at this point in time. Basically we are reinvesting our profits and passing on savings straight through to our customers. We can do that because we are a mutual." Hadley said this mortgage offer was unrelated to the placement of $650 million in mortgage-backed securities in late February, but he did confirm that business conditions were improving for the credit union. "It is reasonable to say that things are improving after the global financial crisis." CUA is planning to launch an "exciting" deposit product in the next month or so, said Hadley.