The Commonwealth Bank of Australia was the first of the big four banks to pass on the Reserve Bank of Australia's rate cut. CBA is now offering its lowest-ever fixed mortgage rates by passing on the RBA's rate cut in full.

CBA said its standard variable rate mortgage will be cut by 0.25 per cent to 5.65 per cent, and its five-year fixed rate mortgage will be reduced by 0.30 per cent to 4.69 per cent, while its three year fixed rate mortgage reduced by 0.25 per cent to 4.69 per cent. The new [variable] rate of 5.65 per cent is the lowest since April 2009. The new standard variable rate will take place effect from February 20.

Westpac has also announced it will reduce its floating interest rate, by 0.28 per cent to 5.7 per cent per annum, exceeding the RBA cut. Westpac's new rate will effective from February 20. Westpac said the reduction will save homeowners $52 a month, or $624 a year, in repayments on an average $300,000 mortgage.

Bank of Queensland cut its variable home loan rate by 25 basis points immediately after the RBA announcement. ME Bank and ING Direct also moved on Tuesday.

This morning, Treasurer Joe Hockey told ABC Radio the banks should immediately pass on the interest rate cut. "The flow-through to the Australian economy is significant, and importantly it must be immediate," he said. "I say again to the Australian banks pass it on in full now, not just to home owners, but importantly small business and credit cards as well."