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Australia’s largest lender has dropped some of its variable rates out of cycle, as other majors make tweaks to their fixed rates.
The Commonwealth Bank of Australia (CBA) has dropped rates for new borrowings, available through both broker and proprietary channels, effective immediately.
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Australia’s largest lender brought in new rates on Friday (23 August), including reductions to some of CBA’s fixed rates, changes to the Life of Loan discount on CBA’s Extra Home Loan as well as the product discount margins on its standard variable rates.
Both new owner-occupier and investor loan rates are being cut, with reductions up to 35 bps for variable rates and 70 bps for fixed rates.
The largest reduction is for owner-occupiers taking out a new three-year fixed rate. They will now be able to access a fixed rate of 5.89 per cent on principal and interest repayments.
The new rates are not available to existing customers.
Speaking of the move on Friday, a Commonwealth Bank spokesperson said: “As part of our ongoing review of our interest rates and market conditions, we have today reduced the interest rates across some of our fixed and variable home loan products for new borrowings…
“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.”
The bank said that it offers customers a range of tools and features to help customers manage their home loan, including a budget planner tool to help estimate how they can manage their income and expenses to meet their goals.
Similarly, Westpac revealed on Wednesday (21 August) that it was cutting fixed rates by up to 80 bps for both owner-occupiers and investors.
This takes Westpac’s lowest two-, three-, four- and five-year fixed rates to 5.89 per cent for customers with a loan-to-value ratio of 70 per cent or under. New-to-bank customers with low LVRs may also qualify for an extra 10-bp discount.
The changes by the two big banks follow on from National Australia Bank (NAB) having moved fixed rates in July, despite the cash rate having held firm at 4.35 per cent since November 2023.
ANZ remains the last of the big four banks to move its fixed rates out of cycle with movements in the official cash rate.
The change to bank rates comes despite the central bank emphasising that it is ‘premature’ to be thinking about reductions to the official cash rate.
The governor of the Reserve Bank of Australia (RBA), Michele Bullock, reiterated her comments from this month’s cash rate decision, highlighting that inflation was still too high to warrant a drop in the 4.35 per cent cash rate.
However, CBA’s head of Australian economics Gareth Aird is still forecasting a drop in the cash rate during the November rate meeting. The other three majors expect the first drop to occur in February 2025.
[Related: Majors observe hawkish shift in RBA’s stance]
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