St George Bank has cut its standard variable home loan interest rate by 85 basis points to 6.89 per cent.

But the reduction was less than the 100 basis points the central bank lopped of official rates yesterday.

“Due to the ongoing impacts of the global financial crisis, financial institutions continue to face higher costs in both the short and long term wholesale funding markets,” St George general manager of retail bank distribution Andrew Moore said.

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

However, St George’s cut was bigger than that of its owner, Westpac Banking Corp.

Westpac yesterday cut its standard variable rate by 80 basis points.

Commonwealth Bank of Australia and National Australia Bank have both passed on the Reserve Bank of Australia rate cut in full.

St George’s 85 basis point deduction equates to a saving of about $145 per month in repayments on an average size loan of $250,000 over a 30 year loan term.

AAP