He said NAB would not cut interest rates on savings accounts by more than 0.19 percentage points. Commonwealth Bank said it would cut the standard variable rate for owner-occupiers and investors paying principal and interest on their mortgage by 0.19 percentage points. CBA will cut rates for interest-only mortgage-holders by 0.25 percentage points, and the bank is expected to argue that lowering borrowing costs for these customers will help to stimulate the economy. The bank has also offered sweeteners to its deposit-holders in a move it says provides a fair balance between savers and borrowers. It will create a new special five-month term deposit with a 2.2 per cent per annum interest rate and offer a further 0.1 per cent on top for pensioners. "With official interest rate settings already at record lows, we are focused on balancing the benefits and the costs of further interest rate reductions between our 1.6 million home loan and over 6 million savings customers," CBA group executive retail banking services Angus Sullivan said.

NAB's Mike Baird Credit:Wolter Peeters "We have carefully considered how to respond to this latest official interest rate cut, given that it is not possible to pass on the full rate reduction to over $160 billion of our deposits, including deposits where interest rates are at or already near zero." Westpac will lower variable interest rates for owner occupiers by 0.2 percentage points, with a 0.3 percentage point reduction for investors with interest only loans. The bank's chief executive of consumer banking, David Lindberg, said the decision reflected the "pressures of the declining cash rate." NAB's acting chief executive Phil Chronican warned on Tuesday that it was becoming "practically impossible" to drop rates for deposits any lower. ANZ Bank had earlier said it would pass on the cut in full, after lowering its mortgage rates by less than rivals last month.

The lender on Tuesday said it would cut all variable rate mortgages by the same amount from July 12. On balance, we believe this is the right decision for our home loan customers and for our business. ANZ's Mark Hand The move will take its standard variable rate for owner occupiers who are paying principal and interest to 4.93 per cent. “We looked at a number of factors before reaching this decision including business performance, market conditions and the impact on our customers," said the lender's group executive for Australian retail and commercial Mark Hand. “On balance, we believe this is the right decision for our home loan customers and for our business."

Paul Chapman, a 27-year-old sales manager from Sydney who has a $295,000 mortgage on the Brisbane house he owns with his primary school teacher wife Bréane, said he planned to hold onto any rate cut coming the couple's way from the Reserve Bank's first consecutive cuts since 2012. Paul and Breane Chapman Credit:Nic Walker "Two months in a row to have a drop like that, it’s just fuelling the uncertainty," Mr Chapman said. "It just scares me we're going down the same road as the global financial crisis, which means chaos. And if I see chaos on the radar, I want to have enough money behind me to see me through. Shares in all of the big banks fell after the RBA's rate cut was announced on Tuesday afternoon, with ANZ shares falling 1.6 per cent, Commonwealth Bank shares down 1.7 per cent, National Australia Bank shares down 1.4 per cent and Westpac shares losing 1.6 per cent.