The Commonwealth Bank of Australia has made two big announcements today: firstly, they have bought BankWest following days of speculation, and secondly they are promising to cut its mortgage rates by more than the central bank when funding and business improve.
Along with all other banks, CNA recently increased their variable home loan rate above that of the RBA's cash rate, leaving many home owners struggling to meet the higher repayments, and causing new home loan approvals to drop considerably. Yesterday's news, and today's news will help make home owners feel a little less financially stressed.
"Once we get back to a normalised market situation ... you can expect to see reductions by the Commonwealth Bank which will be ahead of the Reserve Bank (of Australia)'s OCR (overnight cash rate) and out of cycle decreases," chief executive Ralph Norris told journalists.
CBA will takeover Bank of Western Australia (BankWest) as well as St Andrew's Australia for $2.1 billion, and will further cement their place as Australia's largest bank.
On Tuesday, the RBA cut official rates by 100 basis points, and all of the major five banks, along with smaller banks and non-bank lenders, cut their home loan rates by 80 basis points.
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