"Rates your parents will be jealous of" as banks cut following RBA announcement

The latest advertising campaign from NAB promises "home loan rates your parents will be jealous of", and following yesterday's rate cut announcement, they might be right.

The Reserve Bank yesterday announced an official cash rate cut of 25 basis points, from 2.25% to 2.0%.

Lenders have quickly followed suit, although NAB has not yet announced any rate change.

Of the Big Four, ANZ and the Commonwealth Bank have both announced a rate cut. ANZ will be passing on the full rate 25 basis point cut to its variable rate loan, which will be available at 5.38% from 5.63%, effective 8 May.

The Commonwealth Bank has not passed on the full rate cut, instead choosing to drop its standard variable rate loan by just 20 basis points, from 5.65% to 5.45%, effective 13 May.

ING Direct, ME Bank and loans.com.au have all cut their interest rates by the full 25 basis points. According to comparison website Mozo, the change will save borrowers $44 a month for an average $300,000 25 year loan.

Loans.com.au continues to offer the lowest variable rate, with a 3.98% rate on their Dream Home Loan Essentials product.

Mozo director Kirsty Lamont recommends borrowers use new lower rates to pay off their mortgage more quickly.

"If homeowners were to ignore yesterday's rate cut and keep repayments the same, the average homeowner would save $11,160 in interest and pay their mortgage off 13 months sooner," says Lamont.

Above: NAB's new campaign.

The rates offered by the Big Four banks:

ANZ: Variable Rate
5.38% (effective 8 May)

Commonwealth Bank: Standard Variable Rate
5.45% (effective 13 May)

NAB: Tailored Home Loan
5.63%

Westpac: Rocket Repay Home Loan
5.70%