St George Bank Ltd has cut its standard variable mortgage interest rate but says it cannot pass on the full rate reduction made by the central bank this week.

St George, which is set to be taken over by Westpac Banking Corp, today said it would lower the rate by 62 basis points to 7.74 per cent, from November 14.

The move follows the decision by the Reserve Bank of Australia (RBA) on Tuesday to lower the official cash rate by 75 basis points to 5.25 per cent.

None of the major banks have passed on the full amount of the RBA cut, due to high funding costs in wholesale markets.

St George’s reduction will bring its standard rate into line with those of National Australia Bank Ltd, ANZ Banking Group Ltd, and Commonwealth Bank of Australia Ltd.

National Australia Bank will cut by 62 basis points, while ANZ and Commonwealth will both lower their rates by 58 basis points.

Westpac will cut its rate by 65 basis points to 7.71 per cent.

“Due to the continued impacts of the global financial crisis, financial institutions are facing significantly higher costs in both the short and long-term wholesale funding markets,” St George head of retail banking Les Matheson said in a statement.

“These much higher funding costs overall mean that we are unable to pass on the full RBA decrease of 0.75 per cent.

“However, over the last nine weeks and including today’s reduction our rates have come down by a total of 1.93 per cent.”

St George said its rate reduction equates to a saving of about $118 per month in repayments on an average size loan of $250,000 over a 30-year term.

St George today also cut its fixed home loan interest rates.

From November 10, its fixed rates will fall by up to 25 basis points.

AAP