Westpac has cut its standard variable home loan rate by 37 basis points to 7.09 per cent.

Its variable rate on business loans has been cut by 50 basis points.

The decision on Friday came after the Reserve Bank of Australia announced a surprise 50 basis point cut to the cash rate on Tuesday.

The new lower rates would take effect on May 14, Westpac said.

Westpac said the rate cut would save homeowners with an average $300,000 mortgage $900 a year in monthly repayments.

“We want to continue to help both our business and mortgages customers, while maintaining attractive high interest rates on deposits,” Westpac executive of retail and business banking Jason Yetton said in a statement.

“We feel it is particularly important to help small businesses at this time.

“If business is doing well, it follows that we’re all doing well.

“At the same time, we understand the need to keep mortgage rates as low as possible and continue to reduce rates for homeowners.”

He said more than 90 per cent of Westpac mortgage holders were paying less than the standard variable rate.

Westpac’s cut is the second largest made by the big banks so far in May.

Commonwealth Bank on Thursday cut its standard variable interest rate by 40 basis points to 7.01 per cent.

National Australia Bank (NAB) on Wednesday cut 32 basis points from its standard variable mortgage rate to 6.99 per cent.

ANZ will make its decision on interest rates on May 11.

Among other lenders to cut their rates, Unicredit WA is the only one to cut by 50 basis points, taking its standard variable rate to 6.1 per cent.

NAB’s UBank cut by 40 basis points to 5.83 per cent, Bank of Queensland cut by 35 basis points to 7.11 per cent, and CUA cut by 25 basis points to 6.47 per cent.