CommBank cuts mortgage rates despite looming credit regulations

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on October 18, 2021
CommBank cuts mortgage rates despite looming credit regulations

On Friday the Commonwealth Bank cut interest rates on variable-rate home loans by up to 40 basis points.

This is despite the prudential regulator's serviceability buffer bump due to come into effect from the start of November.

Previously, lenders responded to tightened credit regulations in 2014 and 2017 by increasing home loan rates.

However, CBA's biggest cuts were generally to borrowers with bigger deposits, while APRA's latest announcements will target highly-leveraged borrowers.

Some of the more noteworthy cuts for owner occupiers included:

  • Extra IO 70%: 40 basis point cut to 2.85% p.a. (2.51% p.a. comparison rate*)
  • Extra IO 80%: 30 basis point cut to 2.95% p.a. (2.61% p.a. comparison rate*)
  • Extra P&I 70%: 40 basis point cut to 2.29% p.a. (2.30% p.a. comparison rate*)
  • Extra P&I 80%: 30 basis point cut to 2.39% p.a. (2.40% p.a. comparison rate*)

Variable investor home loans also saw cuts to their interest rates, albeit to a lesser extent:

  • Inv Extra IO 70%: 23 basis point cut to 3.45% p.a. (3.11% p.a. comparison rate*)
  • Inv Extra IO 80%: 16 basis point cut to 3.55% p.a. (3.21% p.a. comparison rate*)
  • Inv Extra P&I 70%: 23 basis point cut to 2.89% p.a. (2.90% p.a. comparison rate*)
  • Inv Extra P&I 80%: 16 basis point cut to 2.99% p.a. (3.00% p.a. comparison rate*)

Meanwhile, fixed rates were increased by 10 basis points, continuing the theme in recent weeks where lenders cut rates on variable-rate loans while increasing rates on fixed terms.

Comparison rates on interest-only home loans are lower than the advertised rates - this is because CBA's maximum interest-only period is five years, and the comparison rate assumes borrowers switch to a principal & interest loan afterwards, which typically have lower interest rates.

ING, AMP also cut variable mortgage rates

ING cut in a similar fashion to CBA, with a focus on variable mortgage rates.

Some more noteworthy cuts included:

  • Orange Advantage P&I 80%: 25 basis point cut to 2.29% p.a. (2.64% p.a. comparison rate*)
  • Mortgage Simplifier P&I 80%: 25 basis point cut to 2.24% p.a. (2.27% p.a. comparison rate*)

These home loan rates apply to home buyers borrowing less than a million dollars.

Orange Advantage home loans come with a 100% offset account, while the Mortgage Simplifier line attracts no monthly or annual fees.

ING also increased interest rates on fixed-rate home loans by between 5 and 20 basis points. 

On Thursday AMP made changes to a few 'Professional Package' variable-rate home loans for investors:

  • Interest Only 80%: 54 basis point cut to 2.79% (2.97% p.a. comparison rate*)
  • Principal & Interest 80%: 63 basis point cut to 2.49% p.a. (2.91% p.a. comparison rate*)
  • Principal & Interest 90%: 52 basis point cut to 3.09% p.a. (3.49% p.a. comparison rate*)
  • Investment Construction: 54 basis point cut to 2.79% p.a. (3.45% p.a. comparison rate*)

These home loan rates apply to home buyers borrowing less than $500,000.


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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
NO UPFRONT OR ONGOING FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
NO UPFRONT OR ONGOING FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees

Rates correct as of November 27, 2021. View disclaimer.


Photo by Squirrel Photos on Pixabay

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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