ANZ Banking Group has cut its variable interest rates on home loans and business loans by 25 basis points.

Meanwhile, Commonwealth Bank has reduced it’s interest rate by 21 basis points and Westpac has cut by 20 basis points.

The move follows the Reserve Bank of Australia’s 25 basis point cut to the cash rate on Tuesday.

The cut takes ANZ’s standard variable mortgage rate to 6.80 per cent, the lowest offered by the major banks.

ANZ’s interest rate cut would save about $13.50 per week from the average loan of $280,000, it said.

The new rate comes into effect from June 15.

“Funding costs remain elevated as a result of the deteriorating economic situation in Europe and strong competition for deposits,” ANZ Australia chief executive Philip Chronican said in a statement.

“We are, however, pleased to be in a position to reduce rates by 0.25 (percentage points) this month.”

“This decision recognises that, although we need to be realistic about funding costs and the challenges the global economic situation is presenting, ANZ also needs to absorb its share of the burden.

“Hopefully, this decision will help relieve some of the pressures that we know homeowners and small businesses are facing at present.”