Australia's two large banks, the Commonwealth Bank and Westpac, have cut back its fixed home loan rates without waiting any further for the central bank's rate setting exercise next month.

Commonwealth Bank have brought down its fixed fixed-rate mortgages by up to 60 basis points in an effort to draw more customers and keep their current clientele.

Westpac, on the other hand, followed suit, saying it cut the interest rate on its three-year fixed rate home loan by 20 basis points.

Westpac said the three-year fixed rate for its Premier Advantage package had been cut from 6.99 per cent to 6.79 per cent.

CBA said its new fixed rates for loans from one to 5 years would now range from 6.59 percent to 6.99 percent, the lowest of any of the four big local banks. As of mid-afternoon, Australia's big four banks according to Commonwealth Securities, are trading low at the stock markets. NAB is down 4.64 pct or 96.5 cents to $19.93, ANZ Banking Group (ANZ) is off 4.11 pct or 76 cents to $17.74, Commonwealth Bank of Australia (CBA) is 4.08 pct or $1.86 to $43.77 while Westpac (WBC) is 3.82 pct or 71 cents weaker to $18.13, Commsec said.

"Many customers want certainty with their home loan repayments and we are pleased to take a lead and offer customers that peace of mind," Commonwealth Bank's head of retail banking services, Ross McEwan, said in a statement.

CBA's tough competitor for this market segment is the National Australia Bank, which has reported a $1.4 billion in earnings hit in the June quarter for improving customer base.

A report by Sydney Morning Herald said that the move of the two banks could be in reaction to the latest sluggish sentiments in the currency and equity markets, which dropped by 20 and 5 percent, respectively on Tuesday's mid-afternoon trading in Sydney.

Analysts are anticipating that the current market movements may put pressure on the Reserve Bank of Australia to cut down its benchmark key rates as well.