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

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • 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%
UNLIMITED REDRAWSSPECIAL 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%
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • 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
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

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%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *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. Rates correct as of May 22, 2022. 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 visit the web site links at the bottom of this page.

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author-avatar
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 strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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