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CBA hikes variable mortgages but leaves some savers out to dry

CBA hikes variable mortgages but leaves some savers out to dry

Australia’s biggest bank, CBA, has finally announced it will pass on the full 0.50 percentage point hike to its variable home loan customers and some savings customers.

Its big bank rivals, Westpac, NAB and ANZ, are yet to make announcements.

CBA mortgage rates for new and existing customers will rise by 0.50 percentage points on 12 August 2022.

This will take the bank’s lowest variable rate to 3.79 per cent. The last time CBA’s lowest variable rate was this high was just over three years ago in June 2019.

CBA variable rates for owner-occupiers paying principal & interest – effective 12 August

Old rateNew rateIncrease in repayments, $500K
Standard variable5.80%6.30%$153
Discounted variable5.10%5.60%$148
Lowest variable3.29%3.79%$134

Source: RateCity.com.au. Repayments are for an owner-occupier paying principal and interest with a $500,000 loan over 25 years. An LVR of 70% applies to CBA’s lowest variable rate. Rates effective 12 August.

As an olive branch to mortgage customers, Australia’s biggest bank is also cutting its lowest 4-year fixed rate to 4.99 per cent – a drop of 1.60 percentage points.

When it comes into effect tomorrow, it will be the lowest 4-year fixed rate on the RateCity.com.au database from any lender. The next lowest is currently 5.34 per cent from BCU.

However, this special rate is only for owner-occupiers paying principal and interest on a package rate ($395 annual fee) for a limited time.

What is CBA doing for savers?

CBA has also announced it will increase the rate on its NetBank Saver by 0.50 percentage points for new and existing customers.

The bank has not announced any changes to its GoalSaver and Youthsaver accounts at this stage.

CBA savings rates – impact of 0.50% hike – effective 12 August

Current max rateNew max rateChange
NetBank Saver

1.30% for 5 mths

then 0.35%

1.80% for 5 mths then 0.85%

+0.50%

GoalSaver

1.25%

N/A

No change

Youthsaver

1.45%

N/A

No change

Source: RateCity.com.au. Conditions for max rate apply.

CBA is also introducing an 18-month term deposit special of 3.00 per cent from next Monday (8 August). While this is a 0.50 percentage point increase to its existing special of 2.50 per cent for 15 months, it is by no means the highest.

Analysis of the RateCity.com.au database shows the highest 1-year term deposit is 3.55 per cent from Judo Bank, while the highest 2-year term deposit is 3.85 per cent from AMP (3.90% for balances over $25,000).

RateCity.com.au research director, Sally Tindall, said: “Once again, CBA is the first big bank out of the blocks, albeit incredibly slowly this time.”

“CBA’s decision to pass on the full hike to its variable rate borrowers comes as no surprise, however, customers already feeling the heat from the last three hikes may find this a difficult pill to swallow,” she said.

“From next week, CBA’s basic variable rate will hit a three-year high of 3.79 per cent – a huge increase from three months ago when it was just 2.19 per cent.

“Australia’s biggest bank is offering an olive branch to home loan customers worried about rising rates – a 4-year fixed rate special at 4.99 per cent for owner-occupiers paying principal and interest.

“This is a whopping cut to the bank’s lowest 4-year fixed rate and currently the lowest in its category. However, this doesn’t automatically make it a fantastic idea.

“People should think carefully about whether they want to lock up their mortgage for the next four years because there can be significant consequences if they decide to break their loan.

“Fixed rates have soared over the last 12 months on the back of rising funding costs, however, there are signs this could be starting to turn around.

“On Tuesday, Macquarie announced it was making significant cuts to its fixed rates and now CBA is following suit. We expect this will trigger further fixed rate cuts from other lenders in response to both evolving market expectations and competition among the banks.

“While it’s great CBA passed the full hike on to its NetBank Saver account, these customers will still only be getting an ongoing rate of just 0.85 per cent. In this market, where we could see ongoing rates over 3 per cent, these savers are still getting paid peanuts.

“CBA’s decision not to pass on the rate hike to its GoalSaver and Youthsaver customers at this stage is a disappointing one.

“Once again, the bank is picking and choosing which savings customers get a boost, and which potentially miss out.

“If you’re one of the millions of Australians with a GoalSaver or a Youthsaver account, call, email, tweet or tag your bank and ask for the full rate hike.

“The bank has said these rates are still under review so now is the time to kick up a fuss. Just remember, it’s the squeaky wheel that gets the oil,” she said.

Screen Shot 2022-08-04 at 12.02.33 pm

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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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