Rate watch: NAB moves first among big four passing on 20 basis points

NAB has announced that it will pass on 20 out of the 25 basis points cut from the cash rate by the RBA yesterday.

The bank's standard variable home loan rate will fall from 6.58% to 6.38% per annum on December 10 - the lowest of the major banks with the Commonwealth Bank (6.6%) and Westpac (6.71%) yet to make an announcement on rates and ANZ (6.6%) making its independent decision on Friday, December 14.

NABs head of personal banking, Lisa Gray said the rate cut delivers on its pledge to offer the lowest standard variable home loan rate of the major banks for 2012 - however the bank did not say whether it would continue with this pledge in 2013.

The bank has offered the lowest standard variable home loan rate of the major banks for 41 months.

"Throughout the year, we have consistently acted to deliver on our pledge to our customers to offer the lowest standard variable rate throughout 2012," she said.

NAB must be fairly confident that neither the Commonwealth Bank nor ANZ will pass on 23 basis points or more.

Were they to do so, the Commonwealth Bank and/or ANZ's standard variable rate would reduce to 6.37% meaning they would have a lower standard variable offering than NAB - a public relations disaster.

Gray said NAB's decisions on interest rates were not taken lightly and the bank sought to strike the right balance between the cost of funding and offering competitive rates to customers.

Update, the Commonwealth Bank has announced it will pass on 20 basis points to borrowers, reducing its standard variable rate to 6.40% from December 10.