Wizard Home Loans has followed Australia’s big banks and cut its variable interest rates by 80 basis points after the Reserve Bank of Australia’s surprise 100 basis point cut to the official cash rate.

Wizard will lower its standard variable rate to 8.49 per cent from tomorrow for new customers, and from Thursday, October 16 for its existing customers, the lender said in a statement this morning.

The interest rate on Wizard’s flagship Rate Breaker home loan product will drop to 7.08 per cent.

Wizard chairman, Mark Bouris, said the company was making the rate cut despite it lacking access to lower cost funding through retail deposits.

Australia’s major banks source around half of their funding from retail deposits, with the remainder sourced from short and long term borrowing and shareholder funds.

The five largest lenders announced an 80 basis point cut to their variable interest rates on home loans on Tuesday.

Wizard competitor RAMS this morning announced a 90 basis point cut to its variable home loan rate.

AAP