The Commonwealth Bank of Australia (CBA) stands alone as the only major bank to cut interest rates after another easing in monetary policy - albeit by only a proportion of the full cut announced by the Reserve Bank of Australia.

CBA, citing what it termed “extremely expensive” funding, said that it did not rule out passing on only partial rate cuts in future.

CBA shaved 10 basis points from its standard variable mortgage rate following the RBA’s 25 basis point rate cut on Tuesday.

National Australia Bank (NAB) said higher funding costs blocked its ability to pass on any portion of the rate cut, while ANZ Banking Group and Westpac have yet to make any announcement.

CBA said on Tuesday that it cut the interest rate on its NetBank Saver account by the full 25 basis points, while leaving interest rates on business loans under review.

The cut underlies CBA’s beneficial funding gap - the difference between the rate charged on deposits and those for loans on its lending books compared with smaller players who, because of the credit squeeze, can access capital but only at a higher cost.

On Credit Suisse numbers, CBA’s beneficial funding gap has widened to $22 billion (equivalent to nine per cent of its loan book) as it increased deposits by $97 billion and loans by $75 billion since July 2007.

Interest rates offered on CBA term deposits have also declined in line with market rates over the past few months, CBA head of retail products Michael Cant told AAP.

The CBA points to the 394 basis points, or 3.94 percentage points, it has already passed on to home loan customers since the RBA began easing interest rates in September last year.

The RBA has eased the cash rate by 425 basis points or 4.25 percentage points, if Tuesday’s 25 basis point cut is included.

However, CBA’s monthly rollover in three- and five-year term funding is costing it around 140 basis points over the 90-day bank bill rate compared to 20 basis points paid before the credit crunch, Mr Cant said.

“One of our most challenging dynamics is every month we have old, cheap funding maturing and being replaced by new, much more expensive funding,” Mr Cant said.

“While the level and cost of new funding has stabilised, one of the real pressure points on our book is just the maturing of funding that was written pre-credit crunch and being replaced by stuff that we’re now paying 140 basis points above bill for.”

CBA would look to passing on more of any further RBA rate cuts to its home loan and deposit customers, Mr Cant said.

The bank’s home lending volumes have soared in recent months, heavily influenced by first home buyers entering the market.

“Over one-third of our lending at the moment is to first home buyers and that would compare with a normal percentage of around 20 per cent to first home buyers,” Mr Cant said.

NAB personal banking head Lisa Gray also pointed to a blowout in term funding costs and said the bank had passed on a 387 basis point cut to its customers during the RBA’s series of interest rate cuts.

CBA’s standard variable rate of 5.64 per cent will apply from April 17.

The interest rates currently applying to other bank standard variable mortgages are 5.74 per cent for NAB and 5.91 per cent for Westpac and ANZ.

AAP