The Commonwealth Bank of Australia (ASX: CBA) share price closed marginally higher at $78.42 today after the Reserve Bank of Australia cut benchmark lending rates 0.25% to 1.25%.
Part of the share price lift is probably due to the fact that CBA's dividend payouts to shareholders will become increasingly attractive to investors as savings rates across products such as term deposits fall even lower.
For example based on today's share price, CBA shares still offer a term deposit thumping trailing yield of 5.5% plus full franking credits to shareholders.
The CBA is also likely to be in the good books of the politicians and its home loan customers today after agreeing to pass on the full 0.25% cut to owner occupier and investor borrowers on its standard variable home loan rates. This is likely to put more money back into the pockets of these borrowers and suggests future borrowers may be able to gain record low mortgage rates.
Elsewhere National Australia Bank Ltd (ASX: NAB) has agreed to pass on a 0.25% rate cut, but Australia & New Zealand Banking Group (ASX: ANZ) will not be popular in refusing to pass on the full 0.25% cut.
