The Reserve Bank handed down a long-awaited rate cut, bringing the cash rate down to 3.60 per cent – its lowest in over two years.

“This is very welcome relief for millions of Australians,” Treasurer Jim Chalmers said following the announcement.

“This interest rate cut will make a meaningful difference to millions of mortgage holders around the country.

“It will put more money in the pockets of people under pressure.”

CBA said it would apply to customers on eligible variable-rate loans, including Business Bank’s Variable Base Rate, Residential Equity Rate, and Overdraft Reference Rate and eligible variable-rate business lending products such as BetterBusiness Loans and Business Overdrafts.

The bank said the rate changes announced today will be effective from August 22.

Customers on an $800,000 home loan will save an estimated $385 per month with the 0.25 per cent rate cut, CBA said.

“With now three rate cuts this year, Australian borrowers are getting some breathing room back in their budgets,” said CBA retail group executive Angus Sullivan.

“It will be very welcome for those with a home loan.”

Westpac followed closely behind after confirming it would pass on the rate cut too.

This will be a 0.25 per cent reduction on variable home loan rates, but it won’t come into effect until even later than CBA, with an August 26 start date.

Westpac will also reduce interest rates on savings accounts, but that will start earlier, on August 22.

ANZ then announced it would lower interest rates for variable rate home loan customers following the Reserve Bank’s decision.

Variable interest rates across ANZ’s Australian home loans will decrease by 0.25 per cent, effective August 22, the bank said.

ANZ said it would review other interest and deposit rates.

NAB was the final big four bank to announce its decision to pass on the rate cut.

It said customers will have their standard variable home loan interest rates cut by 0.25 per cent by August 25.

“This comes at a crucial time to reinvigorate economic activity across Australia,” NAB’s group executive for personal banking Ana Marinkovic said.

“For those who want to reassess their home loan repayments, we’re making it as easy as possible for customers to take advantage of the changes.”

The banks said customers paying will be notified about what this will mean for their repayments and how they can make changes.

“This move from Australia’s two biggest banks puts pressure on the entire mortgage market to do the right thing and pass this RBA cut on in full to variable customers,” said Canstar’s data insights director Sally Tindall.

“After three cuts this year, many borrowers will finally start to feel some breathing room, even if repayments are still far higher than they were two years ago.”

Macquarie Bank also said it cutting both mortgage and savings rates on from Friday, August 15 by 0.25 percentage points.

Other smaller banks including Bank of Melbourne, BankSA and St George have also confirmed plans to pass on the rate cut.

Lenders unloan, which is backed by CBA, and Athena have cut mortgage rates by the same amount too, along with Australian Unity home loans.