CBA falls into the big bank conga line with interest-only rate hikes



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The Commonwealth Bank has followed its competitors by lifting rates for customers who opt for interest-only repayments while offering a small reward to home owners paying down their debt.

CBA owner-occupiers paying principal and interest will save $7 a month, or $84 a year, based on a $350,000 loan over 30 years, as a result of today’s announcement.

Owner-occupiers paying interest-only will pay an extra $88 a month or $1,056 a year, while investors paying interest-only will pay CBA an extra $87 a month or $1,044 a year.

RateCity.com.au CEO Paul Marshall said there is now nowhere left to hide for big four mortgage holders paying interest-only.

“The big banks have unanimously decided to hike rates for both new and existing customers despite the fact APRA’s most recent cap on interest-only was for new lending.

“If you’re an investor who wants to keep paying interest-only, your only reprieve from relatively high rates will be switching to a smaller lender.

“Right now there are still a couple of investor rates offering interest-only terms under 4 per cent, but they’re earmarked as a dying breed.

“Owner-occupiers paying down their principal will welcome the three-basis-point reduction, however the cuts aren’t exactly stacking up with the hikes.

“We would challenge the big banks to pass on more of the savings to mortgage holders who are doing the ‘right’ thing by paying off their loan.

“If borrowers feel like the big banks aren’t looking after them, they should vote with their feet and look for a more competitive home loan with a smaller lender,” Mr Marshall said.

Low-rate investor interest-only loans

Lender Loan Rate
Homestar Finance Variable Rate Investment Loan 3.84%
Freedom Lend Variable Investment Loan 3.99%

CBA standard variable rate changes

Old rate New rate Change Old monthly repayments New monthly repayments Change
Owner-occupier P&I 5.25% 5.22% -3 basis points $1,933 $1,926 -$7
Owner-occupier IO 5.47% 5.77% 30 basis points $1,595 $1.683 $88
InvestorP&I 5.80% 5.80% None $2,054 $2,054 None
Investor IO 5.94% 6.24% 30 basis points $1,733 $1,820 $87

(Calculations based on the average-sized Australian loan of $350,000, over 30 years.)

Big four banks – standard variable rates

Owner-occupier P&I Owner-occupier IO Investor P&I Investor IO
ANZ 5.20% 5.75% 5.80% 6.26%
CBA 5.22% 5.77% 5.80% 6.24%
NAB 5.24% 5.77% 5.80% 6.25%
Westpac 5.24% 5.83% 5.79% 6.30%

 

 

 

 

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