Its two year fixed rate has dropped below two percent but its four year rate has risen
Following recent cuts from Westpac and NAB, the commonwealth bank of Australia has brought its two year fixed rate below two percent to 1.94% - the lowest ever advertised by the major.
But, at the same time, it has increased its four year fixed rate by 20 basis points to 2.19%, making it the only big four bank to increase its four year fixed rate since October 2019. Market watchers have pointed to the expectation of a cash rate rise within the next three years – which begs the question as to whether more banks will follow suit on their four year fixed term products.
MPA contacted the bank about its new fixed rates and a spokesperson for CBA issued the following statement.
"We continually review our interest rates to ensure they remain competitive and meet customer needs. Our review takes into consideration the competitive environment, our cost of funds and customer feedback.
"Given the historically low rate environment customers are increasingly choosing to fix across a variety of terms. We made the decision to lower some of our fixed rates including our 2 year fixed rate home loan to our lowest ever advertised rate to reflect the changes in funding costs which are beginning to normalise after an extended period of low-cost long-term funding.
"For customers that want to fix for longer periods of time, our 4 year fixed rate still remains competitive."
CBA has also reduced its three year fixed rate for investors paying principal and interest in the wealth package by 30 basis points to 2.39%, offering its lowest ever advertised investor rate.
In a media release, Michael Baumann, executive general manager, Home Buying said, “We know that customers are looking to lock in the certainty of fixed rates with around 40 per cent of new customers fixing their loans to take advantage of the current record low rate environment. These changes allow home owners and investors to take advantage of our lowest ever fixed rates, adding to our already market leading home lending solutions including the recently announced CommBank Green Loan.”
CBA has also launched a digital splitting tool within its Netbank app that enables existing customers to select the portion of their loan and the term they would like to fix and see in real time how this would change their repayment amount.
