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CBA slashes small business rates, holds back on variable home loan customers

CBA slashes small business rates, holds back on variable home loan customers

Australia’s largest bank, CBA, has confirmed it will not pass on today’s 0.25 per cent emergency cash rate cut to its variable rate customers.

This is an unprecedented move from our biggest bank, which will exasperate its mortgage customers.

The bank has cut its 1-, 2- and 3-year fixed rates to as low as 2.29 per cent, which are the new lowest fixed rates on the market.

RateCity.com.au analysis shows the average CBA mortgage holder with a $400,000 home loan, will forgo a drop in their minimum monthly repayments of $57 and $510 per year, based on their current discounted variable rate, as a result.

No other banks have announced what they intend to do with their variable rates. For a live list of who has cut, go to: ratecity.com.au/rba-cash-rate.

Sally Tindall, research director at RateCity.com.au, said, “Today’s decision by Australia’s largest bank will frustrate its variable home loan customers. However, it is a win for small business borrowers who are struggling to make ends meet and keep their businesses afloat.”

“This move from CBA is designed to put money back into the pockets of small businesses, but its existing home loan customers have all missed out,” she said.

“CBA has cut some of its fixed rates to a new market low of 2.29 per cent, but this is little comfort to customers wanting to stay on a variable rate loan.

“Banks are between a rock and a hard place when it comes to passing on rate cuts to their mortgage holders, particularly as many savings rates are already so close to zero.

“Call your bank, find out what they intend to do. If they don’t pass on a full cut, it’s worth shopping around in what remains an extremely competitive market,” she said.

Impact of a 0.25 per cent cut if passed on in full

Loan sizeOld rateNew rateDifference - monthlyDifference - annual
$300K3.50%3.25%-$42-$498
$400K3.50%3.25%-$55-$664
$500K3.50%3.25%-$69-$830
$750K3.50%3.25%-$104-$1,245
$1M3.50%3.25%-$138-$1,661

Notes: based on someone paying principal and interest over 30 years. Old rate is based on the estimated RateCity.com.au average variable rate for owner occupiers paying principal and interest.

Impact of a 0.15 per cent cut

Loan sizeOld rateNew rateDifference - monthlyDifference - annual
$300K3.50%3.35%-$25-$300
$400K3.50%3.35%-$33-$400
$500K3.50%3.35%-$42-$500
$750K3.50%3.35%-$62-$750
$1M3.50%3.35%-$83-$1,000

Notes: based on someone paying principal and interest over 30 years. Old rate is based on the estimated RateCity.com.au average variable rate for owner occupiers paying principal and interest.

Impact of a 0.10 per cent cut

Loan sizeOld rateNew rateDifference - monthlyDifference - annual
$300K3.50%3.40%-$17-$200
$400K3.50%3.40%-$22-$267
$500K3.50%3.40%-$28-$334
$750K3.50%3.40%-$42-$501
$1M3.50%3.40%-$56-$668

Notes: based on someone paying principal and interest over 30 years. Old rate is based on the estimated RateCity.com.au average variable rate for owner occupiers paying principal and interest.

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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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