ANZ Bank joined the rest of the big four on Friday by announcing a 20 basis points rate cut for its standard variable rates. With the decision, ANZ pockets 5 basis points out of the 25 basis points cut made by the Reserve Bank of Australia (RBA) last week.

The rate cut brings down ANZ's standard variable home loan rates to 6.6 per cent from 6.8 per cent beginning Oct 19. It translates it savings of $10.75 per week or $560 a year for mortgage holders with an average home loan of $280,000, ANZ estimated. The 20-basis point cut also applies to small business loans of ANZ.

ANZ, Commonwealth Bank of Australia and National Australia Bank all cut their rates by 20 basis points, while Westpac reduced its rate by 18 basis points to 6.69 per cent, which means Westpac will pocket 7 basis points.

ANZ Australia Chief Executive Philip Chronican justified the bank's pocketing 20 per cent of the RBA rate cut to higher cost of attracting deposits even as costs of offshore funding have stabilised.

"Recent stability in wholesale funding markets have been offset by the impact of intense competition for retail deposits as banks seek to improve their funding mix in response to market and regulatory pressures," Mr Chronican said in a statement.

"While this increase in competition is benefitting the majority of our customers, through historically high deposit rates relative to the cash rate, last week's decision from the RBA has provided some scope to once again reduce our variable lending rates," he added.

Greg Evans, director of economics and industry policy of the Australian Chamber of Commerce and Industry, insisted that Aussie banks have no reason to pocket some of the RBA rate cut since their funding pressure had significantly eased.

RateCity, the financial comparison Web site, pointed out that only seven out of 44 lenders have announced rate cuts since the Australian central bank brought down to 3.25 per cent last week the key lending rate.

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