July 1, 2011
In a bid to increase its share of the flagging mortgage market, the Commonwealth Bank has reduced the interest rate on its ‘no fee’ home loan from 7.24 to 7.11 percent. The discounted rate will save mortgage holders around $27 per month on average and will be automatically applied to all existing no-fee loan customers. The no-fee loan is free of monthly and annual fees and charges but does not provide for a split loan.
The increased discount on the variable rate loan is thought to be a further swipe at National Australia Bank’s highly successful ‘break-up’ campaign. When NAB announced it would pay the exit fees for Westpac home loan customers who were willing to jump across, the CBA went on the offensive and offered existing NAB customers $1200 cash to bring their business to the CBA.
The CBA’s interest rate comes on the heels of recent data from the Australian Bureau of Statistics which shows that, in the last five months, the banking industry passed the $1 trillion mark in the amount of money lent for new and existing home loans. This time last year, according to figures from the Australian Bankers Association, the value of loans held by the banks stood at $959.3 million and by April this year had risen to $1.02 trillion.
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