The Reserve Bank handed down a long-awaited rate cut, bringing the cash rate down to 3.60 per cent – its lowest in over two years.

“This is very welcome relief for millions of Australians,” Treasurer Jim Chalmers said following the announcement.

“This interest rate cut will make a meaningful difference to millions of mortgage holders around the country.

“It will put more money in the pockets of people under pressure.”

The Commonwealth Bank of Australia (CBA) announced that it would lower interest rates for its customers on certain flexible-rate loans, including those from the Business Bank’s Variable Base Rate, the Residential Equity Rate, and the Overdraft Reference Rate. This change will also be applied to qualifying variable-rate business lending products like BetterBusiness Loans and Business Overdrafts.

The bank said the rate changes announced today will be effective from August 22.

Customers on an $800,000 home loan will save an estimated $385 per month with the 0.25 per cent rate cut, CBA said.

“Thanks to three interest rate reductions this year, Australian borrowers can finally experience some relief in their financial plans,” stated CBA’s retail group executive, Angus Sullivan.

“It will be very welcome for those with a home loan.”

Westpac followed closely behind after confirming it would pass on the rate cut too.

The reduction will be 0.25% for variable home loan rates, but it will take effect later than CBA’s other rate changes, starting on August 26.

Westpac will also reduce interest rates on savings accounts, but that will start earlier, on August 22.

ANZ then announced it would lower interest rates for variable rate home loan customers following the Reserve Bank’s decision.

Variable interest rates across ANZ’s Australian home loans will decrease by 0.25 per cent, effective August 22, the bank said.

ANZ said it would review other interest and deposit rates.

NAB was the final big four bank to announce its decision to pass on the rate cut.

It said customers will have their standard variable home loan interest rates cut by 0.25 per cent by August 25.

“This comes at a crucial time to reinvigorate economic activity across Australia,” NAB’s group executive for personal banking Ana Marinkovic said.

“For those who want to reassess their home loan repayments, we’re making it as easy as possible for customers to take advantage of the changes.”

The banks said customers paying will be notified about what this will mean for their repayments and how they can make changes.

Canstar’s data insights director, Sally Tindall, remarked, “This action by Australia’s two largest banks challenges the entire mortgage industry to do the right thing by fully passing on this Reserve Bank of Australia rate cut to customers with variable-rate loans.”

“With three reductions already this year, many borrowers are beginning to find some relief, although payments are still considerably higher compared to two years ago,” she added.

Macquarie Bank also said it cutting both mortgage and savings rates on from Friday, August 15 by 0.25 percentage points.

Other smaller banks including Bank of Melbourne, BankSA and St George have also confirmed plans to pass on the rate cut.

Lenders unloan, which is backed by CBA, and Athena have cut mortgage rates by the same amount too, along with Australian Unity home loans.