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CBA cuts 1- & 2-year fixed rates but hikes 4-year loans: a sign of things to come.

CBA cuts 1- & 2-year fixed rates but hikes 4-year loans: a sign of things to come.

CBA has today cut its one- and two-year fixed rates for owner-occupiers, but bucked the trend by hiking its four-year rate.

Australia's largest bank has bowed to pressure from rivals Westpac and NAB, bringing its two-year fixed rate to under 2 per cent.

However, the most significant change was the hike to its four-year fixed rate. This is the first big four bank to hike its four-year owner-occupier rate since October 2019 – a sign the bank is pricing in a higher cash rate from 2024.

Today’s fixed rate changes from CBA for owner-occupiers

(contact us for investor rate changes)

Fixed rates (lowest)YesterdayTodayDifference
1 year2.19%2.09%-0.10%
2 year2.14%1.94%-0.20%
4 year1.99%2.19%0.20%

Note: above rates are for owner-occupiers paying principal and interest on a package loan.

Sally Tindall, research director at RateCity.com.au, said the hikes to the bank’s four-year fixed rates could be a sign of things to come.

“CBA has bowed to market pressure by cutting its two-year rate to under 2 per cent,” she said.

“However, the bank is giving with one hand, and taking away with the other, hiking its four-year fixed rate by the same amount for new customers.

“After the last RBA rate in November 2020, all four big banks responded by cutting fixed rates, in particular their four-year rates. Less than five months later, CBA has taken this deal off the table.

“It’s not surprising CBA has decided to raise its four-year fixed loan – the bank is pricing in at least one cash rate hike over this time.

“Governor Lowe has repeatedly said the first round of cash rate hikes wouldn’t be until at least 2024, but that’s only three years away.

“Someone who fixes their rate for four years today could very well see variable rates go up within that time, provided the economic recovery stays on track.

“Other banks could start hiking their four- and five- year fixed rates in coming months to factor in a potential rate rise in 2024,” she said.

Big four banks – lowest owner-occupier rates 

CBAWestpacNAB ANZ
1 year fixed

2.09%

1.99%

2.09% 

2.04%

2 year fixed

1.94%

1.79%

1.89%

2.04%

3 year fixed

2.14%

1.88%

1.98%

2.04%

4 year fixed

2.19%

1.89%

1.98%

2.24%

5 year fixed

2.99%

2.19%

2.24%

2.24%

Lowest variable rate

2.69%

2.19% for 2 yrs

then 2.69%

2.69%

2.72%

Source: RateCity.com.au. Note: Westpac's rates are for a loan to value ratio of 70%.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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