Commonwealth Bank cuts interest rates

Despite the fact the Reserve Bank of Australia has kept the official cash rate on hold for 10 months, a number of banks have been cutting their interest rates on home loans, with Australia’s biggest bank the latest to announce cuts fixed and variable rates.

The Commonwealth Bank of Australia on Friday said it had reduced the interest rates across some of its fixed and variable home loan products for new borrowings only.

The rate cuts vary, from 0.05% to 0.70%. Different rate cuts apply, depending on the loan product. For example, there’s a 0.20% decrease to the owner-occupied 1-year fixed rate for principal and interest loans, while the 3-year fixed rate has been slashed by 0.70%.

For the owner-occupied standard variable rate, the rate cuts range from 0.15% to 20%, depending on the LVR, with no change for loans with an LVR above 90%.

The changes include cuts to some of CommBank’s fixed rates, changes to the Life of Loan discount on its Extra Home Loan as well as product discount margins on our standard variable rates.

A CommBank spokesperson said the bank offered a range of tools and features to help customers manage their home loan.

“For example, customers can use our budget planner tool to help estimate how they can manage their income and expenses to meet their goals,” the spokesperson said.

“We help more Australians find a home than any other lender and encourage customers to message us in the CommBank app to be connected with a specialist or speak with their lender or broker.”

CBA fixed rate changes – Owner-occupied 

Aussie broker welcomes CommBank rate cuts

Mortgage broker Will Sanchez (pictured above left), franchisee at Aussie Newtown in Sydney, said the decision by CBA to cut its fixed and variable rates was a good one.

‘It’s long overdue, it’s good for our customers,”  Sanchez said. “Everyone’s feeling the pinch with the cost of living pressures. The rates will obviously ease a bit of that pressure in terms of loan repayments.”

“For the market, it will mean that more people are looking to buy very soon.”

Sanchez said he believed an RBA cash rate cut was definitely on the horizon and this was the reason banks such as CommBank and others were trimming their interest rates.

“By offering lower fixed rates now that means they expect the variable rates to come and they’re trying to get the customers to fix and be more comfortable with the repayments for a period of time so they understand what their budget is.”

However, Sanchez said for the moment the majority of his customers remained on variable rates because they were waiting for the RBA to lower interest rates.

“When that happens [lower cash rate], competition [in the property market] will increase … people who couldn’t afford to buy before might be able to afford it. If people can get into the market they should do it as soon as possible.”

Sanchez, who is classed as an Elite broker with CommBank, said he used CBA a lot as they had one of the best, most flexible lending policies of all the banks, with few restrictions on post codes, property types and incomes.

CBA fixed rate changes – Investment home loan

CBA joins other banks in cutting rates

CommBank is among a number of big banks that have cut fixed rates in the last five weeks, according to comparison site Canstar.

Westpac slashed its fixed rates two days ago, while NAB cut its 3-year fixed rate by 0.60 percentage points on July 22.

Canstar said Westpac now offered the lowest fixed rates out of the big four banks across the 1 to 5 year fixed rate terms, while CBA had the equal lowest 3-year fixed rate out of the big four.

Canstar data insights director Sally Tindall (pictured above right) said CBA had made sweeping changes to both its fixed and variable rates in a bid to bring new business in the door.

“This move from Australia’s biggest bank will put heat on the rest of the market to make sure they’ve got competitive new customer home loan rates,” Tindall said.

“While these variable rate changes are only for new customers, there’s nothing stopping existing CBA variable mortgage customers from picking up the phone and asking for this rate cut.”

Tindall said the fixed rate tide continued to turn as the cost of wholesale funding kept falling.

“In just over a month, we’ve seen three of the big four banks cut at least one fixed rate, with just ANZ holding out – for now. However, if history is anything to go by, ANZ is likely to sharpen its fixed rate offering in order to keep up with the big four bank pack.”

It’s not just the big banks lowering select fixed rates, said Tindall.

“Over the last fortnight, a total of seven lenders have cut at least one fixed rate. Despite this, most borrowers are opting to stay on a variable rate in anticipation of RBA rate cuts next year.”

CBA Standard Variable Rate – Owner-occupied

CBA Standard Variable Rate – Investment home loan