Interest rates on loans to large businesses – the bulk of which are closely tied to BBSW rates – have declined over recent months to very low levels (Graph 8). Lending rates on outstanding loans to small businesses decreased by around 20 basis points following the reduction in the cash rate in June (the latest data available).
Small business lending rates remain noticeably higher than interest rates for large businesses. This partly reflects the higher default rates associated with small business loans. Graph 9  Lenders have passed through most of the cash rate reductions to housing interest rates.