(Reuters) – Australia’s two biggest lenders said on Wednesday they will cut interest rates on home loans after the central bank trimmed its cash rate to near-zero to prop up the economy from the country’s worst downturn in a generation.
Commonwealth Bank of Australia said it has lowered its four-year fixed rate home loans for owner-occupied customers by 100 basis points to 1.99% a year, its lowest ever, while No.2 lender Westpac Banking Corp also brought down its rate to 1.99%.
Shares of CBA and Westpac, who form two of Australia’s so-called ‘Big Four’ banks, fell as much as 2.8% each on Wednesday, underperforming their peers. The broader market <.axjo> was trading 0.3% higher.
The Reserve Bank of Australia cut its cash rate on Tuesday to 0.1% to support job creation and tackle a high rate of unemployment after the coronavirus outbreak forced businesses to shutdown, leaving hundreds of thousands without work.
Video: RBA says 0.1% cash rate to stay for three years (ABC NEWS)
Both lenders also trimmed their loan rates for small businesses.
“We are in an extraordinary period with the official cash rate at a historical low and unconventional monetary policy measures in place,” said Richard Burton, Westpac’s acting chief executive of its consumer division.
No. 3 lender National Australia Bank and Australia and New Zealand Banking Group are yet to announce any changes to their rates.
(Reporting by Anushka Trivedi, Rashmi Ashok and Nikhil Kurian Nainan in Bengaluru; Editing by Sam Holmes and Sherry Jacob-Phillips)