CommBank cuts and hikes home loan interest rates

author-avatar By on March 22, 2021
CommBank cuts and hikes home loan interest rates

This morning Commonwealth Bank cut to its 'lowest ever' two-year fixed interest rate for owner occupiers on its 'Wealth Package' mortgage.

However, two other CommBank mortgage interest rates were hiked.

Commonwealth Bank home loan cuts 

The two-year Wealth Package home loan rate was cut by 20 basis points down to 1.94% p.a. (3.93% p.a. comparison rate*) for owner occupiers paying principal & interest (P&I).

The minimum eligible loan size is $150,000 and the maximum loan-to-value ratio (LVR) is 95%.

The 'Wealth Package' line of home loans has no upfront home loan establishment fees, monthly home loan service fees or annual credit card fees, with borrowers paying an annual package fee of $395 instead. 

Below is how CommBank's home loan compares to other lenders in the market across both fixed and variable terms for owner occupiers, keeping in mind the comparison rate.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Various other packaged and non-packaged CommBank home loans for owner occupiers were also cut by either 10 or 20 basis points.

Commonwealth Bank home loan increases

Notably, however, a couple of CommBank home loans were raised by 20 basis points, as seen below: 

  • Wealth Package OO Fixed P&I 4 Years: Up to 2.19% p.a. (3.73% p.a. comparison rate*)
  • OO Fixed P&I 4 Years: Up to 2.34% p.a. (3.96% p.a. comparison rate*)

The 4-year 'Wealth Package' rate hike is notable, because this was CommBank's first foray into the sub-2% home loan world following the Reserve Bank's 'Melbourne Cup cash rate cut' in November.

This rate hike for longer fixed-term loans follows on from last week when Adelaide Bank made similar changes.

There could be various explanations for this, with financial markets 'pricing in' a Reserve Bank rate hike earlier than initially anticipated, as well as a change to the Term Funding Facility taking effect from July.

Some pundits predict this will spell an end to 'record low' fixed home loan rates.


Photo by Maksym Kozlenko on Wikimedia Commons

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Harrison joined Savings in 2020. He is an experienced journalist, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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