The country's largest mortgage lender, the Commonwealth Bank, has ignored pressure to cut its home loan rates by the same as today's Reserve Bank cash rate reduction of 0.25% by dropping its standard variable product by just 0.1%.

In a move which brings to an end the informal 'pact' between the major banks and the Federal Government over the financial pressures facing the economy, the Commonwealth blamed its decision on the high costs it is continuing to face in raising money to support its on-going lending needs.

It is also cited the high rate of interest it is paying on its deposit accounts which have attracted huge sums of money from customers in a 'flight to quality' because of the global financial crisis.

The Age