The Commonwealth Bank, NAB, Westpac, and ANZ have all trimmed their variable mortgage rates after the Reserve Bank cut rates for the first time in four years.

Their moves all reflected the Reserve Bank cutting the cash rate by a quarter of a percentage point to 4.1 per cent, marking the first relief to borrowers since November 2020.

Westpac cut its variable rate by 25 basis points to 6.19 per cent, as the first major bank to move.

The bank’s chief executive of consumer products Jason Yetton said a typical borrower would save $90 per month, effective March 4, or $1,080 per year, based on a $500,000 home loan with principal and interest repayments.

‘Customers could use this as an opportunity to get ahead on their mortgage by putting the extra savings into their mortgage repayments, or into their offset account to help reduce the interest on their loan,’ he said.

The other Big Four banks all followed suit, lowering their variable rate by a quarter of a percentage point, effective on February 28.

The Commonwealth Bank said the latest cut would provide relief from the aggressive rate hikes, with Australia’s biggest home lender offering a 5.9 per cent variable rate.

CBA’s executive of retail banking Angus Sullivan declared: ‘We know that cash rate increases have been challenging for our home loan customers and they are looking forward to some relief.’

ANZ’s group executive of retail Maile Carnegie would help borrowers financially, as it reduced its lowest variable rate to 5.84 per cent – the lowest among the Big Four lenders.

NAB’s group executive for personal banking Ana Marinkovic said the worst was now over for borrowers, as its lowest variable rate fell to 6.19 per cent.

‘We are very pleased to deliver this rate cut to home loan customers – we understand how tough it’s been for many Australians,’ she said.

‘The extended period of high interest rates has placed real strain on household budgets and this rate reduction will help to ease the financial burden.’

The average, owner-occupier variable rate offered by banks will fall to 6.07 per cent, based on Canstar calculations.

But the Big Four banks are still offering even lower three-year fixed rates, with ANZ the most competitive at 5.74 per cent.

The latest RBA cut marks the start of a much-anticipated monetary easing cycle, following 13 rate rises from May 2022 to November 2023.

This left interest rates at their highest level since 2011, in the aftermath of the most aggressive hikes since the late 1980s.

This saw mortgage rates soar from starting with a ‘two’ to beginning with a ‘six’.

Treasurer Jim Chalmers declared the cut was ‘very welcome news for millions of Australians’ with an election due by May.

‘This is the rate relief Australians need and deserve,’ he said.

‘It won’t solve every problem in our economy or in household budgets but it will help.’

But Reserve Bank Governor Michele Bullock warned it was too early to suggest three more cuts were coming in this cycle, as financial markets are predicting.

‘Our feeling at the moment is that is far too confident that that’s as many rate cuts as we’ll be having,’ she said.

‘I can’t say “one and done” – what I can say is that we’ve done one, we’ve moved a bit of restrictiveness, we are still restrictive, and we are waiting for more evidence that we’re getting inflation sustainably back in the band before we are willing to move again.’

Underlying inflation without volatile price movements was at 3.2 per cent in the December quarter, or above the RBA’s 2 to 3 per cent target.

Headline inflation was lower at 2.4 per cent but this was based on one-off $300 electricity rebates.

The Reserve Bank is expecting this measure of inflation, also known as the consumer price index, to soar to 3.7 per cent in late 2025 after Labor’s power rebates finish.

But underlying inflation, known as the trimmed mean, was expected to moderate to 2.7 per cent later this year.