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NAB and Aussie Home Loans have joined the rush to cut interest rates, following the ANZ’s surprise move to change rates independent of the Reserve Bank for the first time in over a decade.

NAB yesterday dropped its standard variable home loan by 20 basis points to 8.36 per cent.

The 0.2 per cent cut would also apply to business loans, and some rates on fixed mortgages would be reduced by 0.3 per cent, the bank said in a statement.

NAB’s one-year fixed home loan has been cut by 30 basis points to 6.99 per cent.

This followed Aussie’s decision on Saturday to drop its rate on variable home loans for first home buyers by 30 basis points to 7.79 per cent.

On Friday, ANZ lowered the interest rate on its standard variable home loan by 25 basis points to 8.32 per cent for new and existing customers, effective from October 27.

NAB spokesman Ahmed Fahour said policy measures taken by the Federal Government this month have had a positive impact on the credit market, enabling the bank’s funding costs to fall.

“We welcome this new development and anticipate we will see some relief in the significantly higher premium we are currently paying for wholesale funds,” he said.

“Should this be the case, then we hope. . . we can pass on further interest rate cuts to our customers.”

Westpac and Commonwealth banks have also said they were reviewing rates.

New research shows the relief was long overdue for families who have had to cut luxuries and work longer hours to cope with 12 consecutive rate rises.

Mortgage lender ING Direct will today release a report showing one in five South Australians believe past rises have led to relationship problems.

A further 35 per cent said it had put more strain on the family and 17 per cent had considered selling their home.

The quarterly study surveyed 240 SA mortgage holders between October 8 and 13.

It was conducted the day after the Reserve Bank dropped the cash rate by 1 percentage point to 6 per cent.

With housing, petrol and food costs soaring, the ING study showed half of South Australians were reluctant to increase their mortgage payments. Instead, some used the savings to pay bills, buy food and necessities and pay off their credit cards.

About one-fifth of those surveyed turned to credit to cope with past rate rises, 15 per cent worked longer hours and 39 per cent cut back on luxuries to meet higher repayments.

However, the study also found 10 per cent of South Australians were now able to plan for a holiday, baby or new car and 10 per cent felt less likely to lose their home.

ING Direct executive director Brett Morgan said confidence was on the rise.

“Home owners were very cautious with the first cut, reluctant or unable to spend it on themselves,” he said.

“The October rate cut appears to have given mortgage holders more breathing space with their finances.”

Source:  News.com.au

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