The Reserve Bank cut official interest rates by one per cent, its fourth reduction in as many months, dropping the official cash rate to 4.25 per cent.

By yesterday afternoon the Commonwealth Bank and National Australia Bank had both agreed to pass on the full cut to home lenders, while Westpac lowered its home loan rate by 0.8 per cent.

The rate reduction has been hailed as good news for the local economy, with Matt Abernethy from Ray White Real Estate in Nowra saying it would help the many people trying to pay off their homes, and those looking at buying or selling properties.

He said the last rate reduction and Federal Government incentives for people buying or building homes had created an influx of enquiries, particularly about land sales.

“People are still cautious, but it can only help the local economy,” Mr Abernethy said.

However Shoalhaven Business Chamber president Tony Emery has joined a growing chorus of calls for the banks to also pass savings on to business borrowers.

The full reductions of recent months had not been passed on to business borrowers, Mr Emery said, and he pointed to a growing disparity between official rates and business loan rates.

“It’s time for banks to get real,” he said.