Aussie Home Loans has cut its variable interest rate by 0.5 per cent to 8.05 per cent for new and existing customers.

Aussie’s basic variable rate has also been cut to 7.59 per cent, from 8.09 per cent, with both rate changes effective for new customers on October 29 and existing customers on November 10.

Aussie said the move comes in the lead-up to the Reserve Bank of Australia’s meeting on November 4 and represents a major challenge to other lenders to keep cutting their rates.

The rate change follows Aussie’s move last week to drop its basic variable rate for first home buyers and all fixed rate loans, with the one-year fixed rate dropping 1.7 per cent to 6.79 per cent.

Executive chairman John Symond said Aussie anticipates there will be further official rate cuts in light of the world financial crisis and is keen to restore the confidence of consumers in these uncertain times.

“Aussie is keen to lead the way in reducing the costs for families and individuals seeking to build or acquire property for the first time, while helping existing borrowers with lower rates to ease their financial burden,” Mr Symond said.

AAP