Commonwealth Bank cuts fixed home loan rates by up to 90 basis points

William Jolly By on September 25, 2019
 
Commbank building

Photo source: Flickr

One of Australia’s biggest banks has cut fixed home loan interest rates by as much as 90 basis points, effective Tuesday 24 September.

Owner-occupied borrowers paying principal and interest (P&I) can now get fixed rates with Commbank starting from 3.29% p.a, while interest-only (IO) borrowers can get fixed loans starting from 3.79% p.a.

Investment principal and interest loans are down by 50 to 75 basis points, while interest-only rates for investors are down by as much as 90 basis points.

These changes are effective for new customers and existing customers switching to a fixed rate home loan.

A Commonwealth Bank spokesperson said the bank regularly reviews its interest rates to ensure it remains competitive “while maintaining prudent lending standards”.

With interest rates at historic lows, we encourage customers to speak with one of home lending experts to ensure they have the best product for their needs.”

Despite the large size of the cuts, Commbank’s non-packaged fixed-rate loans still have significantly higher rates than those offered by other lenders, particularly customer-owned banks:

Company Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
1yr Fixed Rate 3.44% 4.93% $2,229 More details
Great Rate Discount Fixed 1yr 2.79% 3.94% $1,641 More details
3yrs Fixed OO P&I 2.98% 4.39% $1,682 More details
Fixed Rate 1yr 2.98% 4.65% $1,682 More details
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
1yr Fixed Rate
3.44% 4.93% $2,229
More details
Great Rate Discount Fixed 1yr
2.79% 3.94% $1,641
More details
3yrs Fixed OO P&I
2.98% 4.39% $1,682
More details
Fixed Rate 1yr
2.98% 4.65% $1,682
More details

Base criteria of: a $400,000 loan amount, fixed, principal and interest (P&I) owner-occupier home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 26 September 2019. View disclaimer.

CommBank owner-occupier rate changes

The biggest rate cut for owner-occupied borrowers applies to the five-year interest-only option, which has had its rate reduced by the full 90 basis points to 3.99% p.a. (4.62% comparison rate*)

Principal and interest

  • One-year fixed rate (Wealth Package): reduced by 60 basis points to 3.29% p.a. (4.73% p.a. comparison rate*)
  • One-year fixed rate: reduced by 60 basis points to 3.44% p.a. (4.93% p.a. comparison rate*)
  • Four-year fixed rate (Wealth Package): reduced by 60 basis points to 3.49% p.a. (4.52% p.a. comparison rate*)
  • Four-year fixed rate: reduced by 60 basis points to 3.64% p.a. (4.63% p.a. comparison rate*)

Interest-only

  • One-year fixed rates (Wealth Package): reduced by 65 basis points to 3.89% p.a. (4.78% p.a. comparison rate*)
  • One-year fixed rate: reduced by 65 basis points to 4.04% p.a. (4.99% p.a. comparison rate*)
  • Three-year fixed rates (Wealth Package): reduced by 10 basis points to 3.79% p.a. (4.65% p.a. comparison rate*)
  • Three-year fixed rate: reduced by 10 basis points to 3.94% p.a. (4.81% p.a. comparison rate*)
  • Four-year fixed rates (Wealth Package): reduced by 65 basis points to 3.99% p.a. (4.66% p.a. comparison rate*)
  • Four-year fixed rates: reduced by 65 basis points to 4.14% p.a. (4.80% p.a. comparison rate*)
  • Five-year fixed rates(Wealth Package): reduced by 90 basis points to 3.99% p.a. (4.62% p.a comparison rate*)
  • Five-year fixed rates: reduced by 90 basis points to 4.14% p.a. (4.75% p.a comparison rate*)

CommBank investor rate changes

As with owner-occupiers, the biggest changes apply to interest-only loans, with some receiving the maximum 90 basis point reduction.

The four-year fixed rate interest-only loan, for example, has been cut by 90 basis points to 3.99% p.a. (5.04% p.a.).

Principal and interest

  • One-year fixed rates (Wealth Package): reduced by 50 basis points to 3.64% p.a. (5.27% p.a. comparison rate*)
  • One-year fixed rates: reduced by 50 basis points to 3.79% p.a. (5.48% p.a. comparison rate*)
  • Two-year fixed rates (Wealth Package): reduced by 15 basis points to 3.44% p.a. (5.12% p.a. comparison rate*)
  • Two-year fixed rates: reduced by 15 basis points to 3.59% p.a. (5.29% p.a. comparison rate*)
  • Three-year fixed rates (Wealth Package): reduced by 5 basis points to 3.64% p.a. (5.04% p.a. comparison rate*)
  • Three-year fixed rates: reduced by 5 basis points to 3.79% p.a. (5.19% p.a. comparison rate*)
  • Four-year fixed rates (Wealth Package): reduced by 75 basis points to 3.64% p.a. (4.94% p.a. comparison rate*)
  • Four-year fixed rates: reduced by 75 basis points to 3.79% p.a. (5.06% p.a. comparison rate*)
  • Five-year fixed rates (Wealth Package): reduced by 25 basis points to 3.64% p.a. (4.84% p.a. comparison rate*)
  • Five-year fixed rates: reduced by 25 basis points to 3.79% p.a. (4.94% p.a. comparison rate*)

Interest-only

  • One-year fixed rates (Wealth Package): reduced by 50 basis points to 3.89% p.a. (5.29% p.a comparison rate*)
  • One-year fixed rates: reduced by 50 basis points to 4.04% p.a. (5.51% p.a comparison rate*)
  • Two-year fixed rates (Wealth Package): reduced by 10 basis points to 3.79% p.a. (5.17% p.a. comparison rate*)
  • Two-year fixed rates: reduced by 10 basis points to 3.94% p.a. (5.36% p.a. comparison rate*)
  • Three-year fixed rates (Wealth Package): reduced by 20 basis points to 3.79% p.a. (5.06% p.a. comparison rate*)
  • Three-year fixed rates: reduced by 20 basis points to 3.94% p.a. (5.23% p.a. comparison rate*)
  • Four-year fixed rates (Wealth Package): reduced by 90 basis points to 3.99% p.a. (5.04% p.a. comparison rate*)
  • Four-year fixed rates: reduced by 90 basis points to 4.14% p.a. (5.18% p.a. comparison rate*)
  • Five-year fixed rates (Wealth Package): reduced by 20 basis points to 3.99% p.a. (4.96% p.a. comparison rate)
  • Five-year fixed rates: reduced by 20 basis points to 4.14% p.a. (5.09% p.a. comparison rate)

Westpac had also cut interest rates

Commbank isn’t the only major bank to cut interest rates this month, as the likelihood of another Reserve Bank interest rate reduction increases.

As all signs point toward an October rate cut, Westpac Group got ahead of the game in early September, lowering various fixed & variable home loan interest rates by as much as 130 basis points.

Westpac subsidiaries St. GeorgeBank of Melbourne and BankSA cut fixed rates by 135 basis points the previous month.

Westpac’s General Manager for Home Ownership Will Ranken told Savings.com.au at the time that fixed loans remain a popular option for customers looking for certainty around their home loan repayments.

“The current low interest rate environment is driving competitive offers for home buyers, which coupled with the new home loan incentives and discounts available may make it an appealing time for Australians to start thinking about purchasing a home,” he said.

More recently, Bendigo & Adelaide Bank, as well as Newcastle Permanent, cut interest rates to as low as 2.99% p.a, while ME yesterday cut variable home loan rates to investors by up to 49 basis points.

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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 2018. 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 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers’ products may not be available in all states.

In the interests of full disclosure, Savings.com.au 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.

*Comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.

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William Jolly
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.
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