Following in the footsteps of the Reserve Bank of Australia (RBA), other banks are cutting interest rates to stay competitive. With global growth concerns, deflation worries, and a lack of credit demand, the RBA unexpectedly announced Tuesday that it had reduced the official cash rate by 25 basis points to 2.75%.
On the same day, Suncorp Bank (ASX: SUN) issued a statement that it will also lower its variable home loan interest rate and small business variable rates by 25 basis points, effective May 24. The new cut will put its home loans at an annual variable rate of 6.24% for new and existing customers.
"This rate cut will provide some welcome relief for home owners and small businesses, with the retail sector also likely to benefit from any boost in consumer and business confidence," said CEO David Foster in a statement.
A day behind, AMP Bank (ASX: AMP) announced yesterday that it will also reduce its variable home loan interest rate by 25 basis points to 6.25% annually. The bank's new rate remains 0.01 percentage points above Suncorp's rate, and will go into effect May 24 for new customers and May 27 for existing customers.
Since November 2011, the RBA has cut official cash rates by 2%.
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