CommBank joins the other majors in raising home loan rates following the RBA’s cash rate rise
Commonwealth Bank of Australia has announced that it will raise its home loan rates by 0.25% p.a. Following the Reserve Bank’s decision to raise the official cash rate.
CBA’s hikes pass the central bank’s cash rate rise on in full. The bank is also raising interest rates for three savings products: NetBank Saver, Youthsaver and GoalSaver. While the NetBank Saver and Youthsaver products will see the full 0.25% rate hike, GoalSaver’s interest rate will increase by only 0.15%.
All mortgage and savings rate changes will take effect March 17.
CBA’s mortgage rate hikes come after the three other major banks – ANZ, Westpac and NAB – raised their rates in response to Tuesday’s RBA hike.
CBA’s new lowest variable rates
|
|
Old lowest rate |
New lowest rate |
Increase in repayments |
|---|---|---|---|
|
Basic variable |
5.22% |
5.47% |
$74 |
|
Discounted variable rate |
5.07% |
5.32% |
$73 |
|
Index rate |
7.8% |
8.05% |
$82 |
Source: RateCity.com.au. Repayments are for an owner-occupier paying principal and interest with a $500,000 debt and 25 years remaining. LVR requirements apply.
RateCity research director Sally Tindall said the latest hike to mortgage rates would be “unwelcome news” to Australian households already struggling to make ends meet.
“These seemingly never-ending rate hikes are starting to rattle some families, who have already made every single cutback they can possibly think of and don’t know where to turn next,” Tindall said.
Angus Sullivan (pictured above), group executive for retail banking at CBA, said the bank offered tools to customers struggling with the rate hikes.
“We know the changing interest rate environment and rising cost of living mean that many Australian households are focused on what they can do to manage budgets, including rethinking some of their spending habits and savings goals,” Sullivan said. “That’s why we encourage Australians to explore our Cost of Living Support Hub, where they can find a range of tools and insights designed to help them manage their finances.”
Tindall also recommended that customers contact their bank directly if they worry that they won’t be able to meet their mortgage repayments.
“If you don’t think you can make these higher repayments, pick up the phone and tell your bank as soon as you can,” she said. “It’s a conversation you probably never wanted to have with your bank, but the sooner you make the call, the more options you’re likely to have.”
Sullivan echoed that sentiment.
“Starting that conversation early – by messaging us in the CommBank app to connect with one of our specialists – allows us to work together to find solutions,” he said. “In addition to this support, we are also proactively contacting customers who are coming off a fixed-rate mortgage this year to discuss the support and options available.”
Savings rates
TIndall also dinged CBA for failing to pass on the full RBA hike for all of its savings products.
“CBA has passed on full hikes to two of its three main savings accounts, but fallen agonisingly short on its GoalSaver account,” she said. “These customers will only be getting a partial hike, with just a 0.15-percentage-point rise. This is a surprising move from Australia’s biggest bank, as it puts their highest savings rate behind the other big four.
“While a difference of 0.10 percentage points isn’t likely to push existing customers away in droves, the bank could miss out on new business from savers chasing competitive rates,” Tindall said. “Currently, the highest ongoing savings rates for all adults is 4.85%< while young adults can get rates up to 5.15%. These could inch even higher once the market leaders declare their hand.”
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