Two of Australia’s major banks, Commonwealth Bank and Westpac have joined the growing number of lenders cutting home loan interest rates. Will the other big lenders follow?

CommBank announced a suite of fixed-rate, home loan products following a decision to slice up to 60bps (0.60 per cent) off its fixed rate for home loan products. Fixed rates for 1 to 5-year products will range from 6.59 percent to 6.99 percent and will be the lowest rates for the 1 to 5 year products across all banks. These new rates will be effective Friday 12 August, 2011.

Westpac, meanwhile, has dropped the three-year fixed rate on its Premier Advantage Package by 20 basis points to 6.79 per cent This means that Westpac customers can enjoy the certainty of a fixed repayment amount for three years.

Its subsidiary St.George Bank has likewise reduced its two and three year fixed home loan rates by 0.20 per cent pa, effective today. Following today’s rate decreases, St.George’s two year fixed rate home loan has been reduced to a competitive 6.69 per cent pa for Advantage Package customers. St.George’s three year packaged fixed home loan rate has decreased to 6.79 percent pa.

The move comes after the Reserve Bank of Australia earlier this month decided to leave the cash rate unchanged. The other lenders, according to analysts, may follow as growing liquidity in their hands will also mean higher costs and lower margins in the long term.