Big banks cut fixed mortgage rates

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Big banks cut fixed mortgage rates

Commonwealth Bank and Westpac have slashed their fixed home-loan rates, fuelling market expectations of an official rate cut and adding to pressure on the dollar.

CBA's move to cut its fixed-rate mortgages by up to 60 basis points came after some of the heaviest falls in global share markets in three years, which have stoked fears of a double-dip US recession and a global economic slowdown.

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Later in the morning, Westpac followed suit, saying it had cut the interest rate on its three-year fixed rate home loan by 20 basis points.

Westpac said the three-year fixed rate for its Premier Advantage package had been cut from 6.99 per cent to 6.79 per cent.

CBA, which faces stiff competition from local rivals such as National Australia Bank, said its new fixed rates for loans from one to five years would now range from 6.59 per cent to 6.99 per cent, the lowest of any of the four big local banks.

"Many customers want certainty with their home loan repayments and we are pleased to take a lead and offer customers that peace of mind," Commonwealth Bank's head of retail banking services, Ross McEwan, said in a statement.

The news knocked almost half a cent off the already-battered Australian dollar, reinforcing market assumptions that the central bank would be forced to abandon its tightening bias and instead opt for a near-term rate cut to support the economy.

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Australia's money market is pricing in almost 160 basis points of cuts to the official 4.75 per cent cash rate in the next 12 months.

AAP, Reuters

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