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CBA makes major hikes to fixed rates as market predictions defy RBA

CBA makes major hikes to fixed rates as market predictions defy RBA

Australia’s biggest bank, CBA, has today hiked fixed rates by a massive 1.40 percentage points for both owner-occupiers and investors on all fixed rate terms.

In contrast, CBA has cut its lowest variable home loan rate by 0.15 percentage points, down to 2.79 per cent with one major catch – the revised rate is only for new customers with a 30 per cent deposit.

The change comes less than two weeks after the bank hiked rates for both new and existing variable customers by 0.50 percentage points, following the June double cash rate hike.

CBA VARIABLE CHANGES: owner-occupiers paying principal and interest – new customers only

Note: loan-to-value ratio (LVR) requirements apply

Old rateNew rateChange
Extra Home Loan (≤70% LVR)

2.94%

2.79%

-0.15%

Extra Home Loan (70.01% - 80% LVR)

3.04%

2.89%

-0.15%

Source: RateCity.com.au.

CBA FIXED CHANGES: owner-occupiers principal and interest 

TermOld rateNew rateChange
1-yr fixed

3.59%

4.99%

+1.40%

2-yr fixed

4.39%

5.79%

+1.40%

3-yr fixed

4.99%

6.39%

+1.40%

4-yr fixed

5.19%

6.59%

+1.40%

5-yr fixed

5.29%

6.69%

+1.40%

Source: RateCity.com.au. Note: Rates are for customers on a package loan.

CBA lowest rates – 1 year ago vs today

Term1 year agoTodayChange
1-yr fixed

2.09%

4.99%

2.90%

2-yr fixed

1.94%

5.79%

3.85%

3-yr fixed

2.19%

6.39%

4.20%

4-yr fixed

2.24%

6.59%

4.35%

5-yr fixed

2.99%

6.69%

3.70%

Lowest variable

2.69%

2.79%

0.10%

Source: RateCity.com.au. Rates are for owner-occupiers paying principal and interest. Some LVR requirements apply.

RateCity.com.au research director, Sally Tindall, said: “Today’s fixed rate hikes from Australia’s biggest bank are anything but typical”.

“The bank is responding to the rising cost of fixed rate funding and a market that refuses to believe the RBA will stop hiking the cash rate at around 2.50 per cent,” she said.

“Less than a year ago, CBA was still offering one fixed rate under 2 per cent. Today the bank’s lowest fixed rate is just under 5 per cent, while the majority are well over 6 per cent.

“It’s incredible to see fixed rates move this dramatically in such a short space of time. The sub-2 percent fixed rates from 12 months ago now seem like a distant dream.

“We expect other banks will follow in CBA’s wake. Westpac and NAB’s fixed rates are now, in many cases, over a percentage point lower. It’s only a matter of time before these banks hike fixed rates again.

“While CBA might have turned its back on competition in the fixed rate sector, it has got its eyes squarely focused on reeling in new variable rate customers.

“Today’s cut to CBA’s Extra Home Loan brings the bank’s lowest variable rate down to a relatively competitive 2.79 per cent, however, existing customers should think twice if they’re expecting to get this rate.

“Once again, loyal customers are getting the raw end of the deal. CBA customers on the Extra Home Loan should call up the bank and ask for this discount.

“If the bank doesn’t budge, it could be time for them to take their home loan shopping to a bank willing to lower their rate,” she said.

Lowest big four bank rates for owner-occupiers paying principal and interest

(note: interest-only and investor rates are higher)

Rate typeCBAWestpacNABANZ
1-yr fixed

4.99%

4.09%

3.59%

4.69%

2-yr fixed

5.79%

4.79%

4.59%

5.49%

3-yr fixed

6.39%

5.19%

4.99%

5.89%

4-yr fixed

6.59%

5.29%

5.39%

5.99%

5-yr fixed

6.69%

5.39%

5.49%

6.09%

Lowest variable

2.79%

2.64% for two years then 3.04%

2.94%

2.79%

Source: RateCity.com.au. Rates are for owner-occupiers paying principal and interest. Some LVR requirements apply.

Lowest home loan rates on RateCity.com.au

Rate typeLenderAdvertised rate
1-yr fixedUnity Bank

2.74% 

2-yr fixedThe Capricornian

3.39% 

3-yr fixedMacquarie Credit Union

4.02% 

4-yr fixedSouthern Cross Credit Union

4.59% 

5-yr fixedSouthern Cross Credit Union

4.79% 

Lowest variableHomestar Finance, Credit Union SA

2.44% 

Source: RateCity.com.au. Rates are for owner-occupiers paying principal and interest. Some LVR requirements apply.

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This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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