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CBA overhauls mortgages in bid for ideal customers

Laine Gordon avatar
Laine Gordon
- 4 min read
CBA overhauls mortgages in bid for ideal customers

Australia’s biggest bank, CBA, has slashed its advertised package rates by up to 2.03 percentage points for new customers with big deposits.

In a move that is likely to shake up the mortgage market, CBA has re-structured its Wealth Package with massive discounts listed for customers if they own a decent proportion of their property.

On Friday, the advertised rate for the bank’s Wealth Package was 6.60 per cent for owner-occupiers paying principal and interest, with no advertised discounts for customers with big deposits.

Today this rate is now as low as 4.57 per cent for new customers who own at least 40 per cent of their home (60 per cent loan-to-value ratio), or existing CBA customers looking to increase their loan.

As a result of the overhaul, many of CBA’s advertised package rates are now lower than the bank’s no-frills options. For larger loans this will mean the package rate could be cheaper than the basic option, even when the annual fee is taken into account.

Package home loans include an offset account but typically have higher advertised rates than the bank’s no-frills option, alongside an annual fee of $395. While the rates are higher, the banks often hand out undisclosed discounts to select borrowers and brokers.

CBA Wealth Package rates - includes offset account and $395 annual fee

for owner occupiers paying principal and interest

Loan to value ratio (LVR)Old advertised rateNew advertised rateChange % pts
60% or below6.60%4.57%-2.03%
60.01% - 70%6.60%4.60%-2.00%
70.01% - 80%6.60%4.67%-1.93%
80.01% - 90%6.60%5.24%-1.36%
90.01% - 95%6.60%6.24%-0.36%

Source: RateCity.com.au.

CBA Extra Home Loan - no offset account, no ongoing fees

for owner occupiers paying principal and interest

LVRAdvertised rate
70% or below4.69%
70.01% to 80%4.79%
80.01% to 95%5.64%

Source: RateCity.com.au.

The RateCity.com.au database shows:

  • 63% of lenders offer lower rates to new customers with big deposits
  • 82% of lenders advertise higher rates for loans with offset accounts

Big four bank offset home loans – how they now stack up?

While the big banks often offer select customers sizeable discounts behind closed doors on their package home loan rates, this move by CBA will force other big banks to consider restructuring their advertised prices.

CBA’s lowest variable rate loan with an offset is now up to 1.80 percentage points lower than the advertised rates from its big four competitors.

Big four banks’ lowest advertised rate with an offset

BankLowest rate

- with offset

Conditions
CBA4.57%LVR 60%. $395 annual fee
Westpac5.94%LVR 70%. $395 annual fee
NAB6.37%Loan size $750K+. $395 annual fee
ANZ5.74%LVR 80%. $120 annual fee.

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

RateCity.com.au research director, Sally Tindall, said: “For years the big banks have been offering up special discounts to select customers that others can’t see. This move from CBA is hopefully a step closer to the end of this cloak of secrecy.”

“Westpac, NAB and ANZ will now be under pressure to drop the advertised prices on their package home loan rates, which are now significantly higher than what’s on offer from their biggest competitor,” she said.

“These discounts will help Australia’s biggest bank shore up its loan book with rock solid borrowers who are well-placed to be able to withstand the pressures that come with rising rates.

“Owner-occupiers with a decent amount of equity up their sleeve are a hot commodity in an uncertain market where rates continue to rise, and property prices are on the fast train south.

“These new advertised rates might be reserved primarily for new customers, but existing CBA borrowers should use this newfound transparency from Australia’s biggest bank to haggle for a better rate.

“If you’ve got a loan with CBA, now’s the time to do a reality check on your rate. If its higher than what your bank is offering new customers, ask the bank to match it.

“If you’ve made significant headway into your loan, you should be able to reap the rewards too,” she said.

Some of the lowest variable rate loans with an offset account

LenderAdvertised rateConditions and fees
Auswide Bank4.26%LVR 75%. $395 annual fee
Bendigo Bank4.27%$250 upfront fee. $120 annual fee.
Bank of Sydney4.34%$150 upfront fee
Bank Australia4.44%$350 package fee

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

Compare home loans in Australia

Product database updated 14 Jul, 2024

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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