CBA cuts fixed rates by up to 0.50%

CBA cuts fixed rates by up to 0.50%

Australia’s largest bank, CBA, has today cut fixed rate home loans by up to 0.50 per cent.

Commonwealth Bank has slashed all its investment fixed rates, as well as its 1, 4 and 5-year fixed owner-occupier mortgage rates.

The biggest cuts are to the 4- and 5-year fixed investment interest-only loans, which have dropped by 0.50 per cent.

RateCity.com.au research shows 30 lenders have cut fixed rates this year, including Suncorp, Westpac and Bankwest.

As a result of today’s changes, CBA now has the lowest 1-year fixed rate out of the big four banks and equal lowest 4- and 5-year fixed rate for owner-occupiers.

TODAY'S CBA FIXED RATE CHANGES

Owner occupier fixed package rates, principal and interest

  Old rate New rate Change
1 year

3.29%

2.99%

-0.30%

2 year No change
3 year No change
4 year

3.49%

3.19%

-0.30%

5 year

3.49%

3.19%

-0.30%

Investor fixed package rates, principal and interest

  Old rate New rate Change
1 year

3.64%

3.19%

-0.45%

2 year

3.44%

3.19%

-0.25%

3 year

3.64%

3.19%

-0.45%

4 year

3.64%

3.29%

-0.35%

5 year

3.64%

3.29%

-0.35%

Investor fixed package rates, interest only

  Old rate New rate Change
1 year

3.89%

3.39%

-0.50%

2 year

3.79%

3.39%

-0.40%

3 year

3.79%

3.39%

-0.40%

4 year

3.99%

3.49%

-0.50%

5 year

3.99%

3.49%

-0.50%

Source: RateCity.com.au

RateCity research director, Sally Tindall, said the Commonwealth Bank was cutting fixed rates to stay competitive.

“With fixed rates now as low as 2.50 per cent, banks are being forced to take the knife to their home loan rates to attract new business,” she said.

“CBA’s decision to cut all investor fixed rates is a sign it wants them back on the books.

“Since the APRA caps on investors and interest-only lending have been scrapped, banks have been increasingly shaving investor rates.

“Although fixed rate cuts are often a sign of an imminent RBA cut, these latest changes could be more about CBA drumming up new business.

BIG FOUR BANK FIXED RATES – HOW THEY COMPARE

Owner occupier, principal and interest

  CBA Westpac NAB ANZ
1 year

2.99%

3.19%

3.19%

3.28%

2 year

2.99%

2.88%

2.88%

2.98%

3 year

2.99%

2.88%

2.98%

2.98%

4 year

3.19%

3.39%

3.19%

3.53%

5 year

3.19%

3.39%

3.19%

3.53%

Source: RateCity.com.au

Notes: The above rates are the banks' lowest fixed rates in each category. Some LVR restrictions apply.

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Learn more about home loans

Monthly Repayment

Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

What is the difference between fixed, variable and split rates?

Fixed rate

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Variable rate

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

Split rates home loans

A split loan lets you fix a portion of your loan, and leave the remainder on a variable rate so you get a bet each way on fixed and variable rates. A split loan is a good option for someone who wants the peace of mind that regular repayments can provide but still wants to retain some of the additional features variable loans typically provide such as an offset account. Of course, with most things in life, split loans are still a trade-off. If the variable rate goes down, for example, the lower interest rates will only apply to the section that you didn’t fix.

What is the difference between a fixed rate and variable rate?

A variable rate can fluctuate over the life of a loan as determined by your lender. While the rate is broadly reflective of market conditions, including the Reserve Bank’s cash rate, it is by no means the sole determining factor in your bank’s decision-making process.

A fixed rate is one which is set for a period of time, regardless of market fluctuations. Fixed rates can be as short as one year or as long as 15 years however after this time it will revert to a variable rate, unless you negotiate with your bank to enter into another fixed term agreement

Variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts however fixed rates do offer customers a level of security by knowing exactly how much they need to set aside each month.

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

What happens to my home loan when interest rates rise?

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.

Who offers 40 year mortgages?

Home loans spanning 40 years are offered by select lenders, though the loan period is much longer than a standard 30-year home loan. You're more likely to find a maximum of 35 years, such as is the case with Teacher’s Mutual Bank

Currently, 40 year home loan lenders in Australia include AlphaBeta Money, BCU, G&C Mutual Bank, Pepper, and Sydney Mutual Bank.

Even though these lengthier loans 35 to 40 year loans do exist on the market, they are not overwhelmingly popular, as the extra interest you pay compared to a 30-year loan can be over $100,000 or more.

What is a comparison rate?

The comparison rate is a more inclusive way of comparing home loans that factors in not only on the interest rate but also the majority of upfront and ongoing charges that add to the total cost of a home loan.

The rate is calculated using an industry-wide formula based on a $150,000 loan over a 25-year period and includes things like revert rates after an introductory or fixed rate period, application fees and monthly account keeping fees.

In Australia, all lenders are required by law to publish the comparison rate alongside their advertised rate so people can compare products easily.

What is a honeymoon rate and honeymoon period?

Also known as the ‘introductory rate’ or ‘bait rate’, a honeymoon rate is a special low interest rate applied to loans for an initial period to attract more borrowers. The honeymoon period when this lower rate applies usually varies from six months to one year. The rate can be fixed, capped or variable for the first 12 months of the loan. At the end of the term, the loan reverts to the standard variable rate.

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

Savings over

Select a number of years to see how much money you can save with different home loans over time.

e.g. To see how much you could save in two years by switching mortgages,  set the slider to 2.

How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out.