0.13% drop: CommBank fails to pass on large portion of RBA rate cut to home loan customers
02 Oct 2019
The Commonwealth Bank became the first of Australia’s big four banks to respond to Tuesday’s RBA rate cut after making an announcement last night that it would cut 0.13% off variable home loan interest rates for its owner occupier borrowers.
The move from Commbank follows on the heels of the RBA’s decision to slash 0.25% off the official cash rate at its October meeting in Sydney yesterday, with the rate now sitting at an historic low of 0.75%.
The Commonwealth Bank's move will impact a number of owner occupier and investor home loans, with the changes coming into effect on 22 October, 2019.
The changes
• 0.13% reduction to Standard Variable Rate home loans for owner occupiers making principal and interest repayments. New rate will sit at 4.80% (4.95% comparison rate*)
• 0.13% reduction to Standard Variable Rate home loans for owner occupiers making interest-only repayments. New rate will sit at 5.29% (5.44% comparison rate*)
• 0.13% reduction to Standard Variable Rate home loans for investors making principal and interest repayments. New rate will sit at 5.38% (5.53% comparison rate*)
• 0.25% reduction to Standard Variable Rate home loans for investors making interest-only repayments. New rate will sit at 5.64% (5.79% comparison rate*)
Angus Sullivan, Group Executive Retail Banking Services at the Commonwealth Bank, said that the bank weighed up the interests of both borrowers and savers in the decision.
“As the Reserve Bank cash rate has reached record lows, we face a difficult balancing act between the multiple, valid interests of our stakeholders. Particularly given it is currently not feasible to pass on the full rate reduction to more than $160 billion of our deposits which are at, or near, zero rates," he said.
“In balancing these interests, we have carefully considered how to best meet the needs of over 6 million savings customers – who may find it challenging to make ends meet with record low savings interest rates – with the needs of our 1.6 million home loan customers, who want to pay less on their mortgages."
RELATED: Interest rates hit 0.75% after October RBA meeting, so has your lender passed on the full cut?
However, Commonwealth Bank mortgage customers may be less than happy with the decision, as the bank has now failed to pass on the full 0.25% RBA rate cut for a second consecutive time.
In fact, since the Reserve Bank first cut rates in June 2019 the Commonwealth Bank has only passed on 0.57% to variable home loan customers, despite the official cash rate having fallen by 0.75% over that same period.
This is in stark contrast to a handful of challenger and online lenders, with the likes of Athena Home Loans and Homestar having already passed on Tuesday’s cut in full - that’s on top of passing on the full 0.25% June and July RBA cuts as well.
The Commonwealth Bank's Standard Variable rate offer, which offers rates from 4.80% (4.95% comparison rate*), also remains well above the current average variable home loan rate for owner occupiers making principal and interest repayments in the Mozo database.
As of October 1, the average rate in the Mozo database sat at 3.87%, and it’s likely to fall further even further as other lenders make adjustments to their own rates following the RBA cut.
RELATED: Athena Home Loans springs into action, passes on full 0.25% cut
Ready to compare your existing home loan rate to other offers on the market? Check out some of the competitive rates in the table below, or check out Mozo’s home loans comparison tables for an even more extensive range of deals.
Compare home loans 2019 - rates updated daily
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Promoted
UBank
2.84% p.a.
2.84% p.a.
$1234
Product details Close detailsUBank UHomeLoan - Discount Offer
Owner Occupier, Principal & Interest
2.84% p.a.
2.84% p.a.
Free redraw with flexible repayments. Min 20% deposit. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category^.
UHomeLoan - Discount Offer
Free redraw with flexible repayments. Min 20% deposit. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category^.
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2.84% p.a.
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2.84% p.a.
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$0
-
$0.00
-
$0.00
-
yes - free
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yes - free
-
no
-
80.00%
-
$200,000
-
-
-
Variable
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Principal & Interest
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Owner Occupier
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Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the UHomeLoan - Discount Offer
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Promoted
loans.com.au2.88% p.a.
2.90% p.a.
$1234
Product details Close detailsloans.com.auSmart Home Loan
Owner Occupier, Principal & Interest
2.88% p.a.
2.90% p.a.
A low-rate home loan that could save you thousands. No application or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount, Limited time only.
Smart Home Loan
A low-rate home loan that could save you thousands. No application or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount, Limited time only.
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2.88% p.a.
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2.90% p.a.
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$520
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$0.00
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$0.00
-
yes - free
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yes - free
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no
-
80.00%
-
$50,000
-
$1,000,000
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Variable
-
Principal & Interest
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Owner Occupier
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Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Smart Home Loan
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Promoted
Athena2.84% p.a.
2.80% p.a.
$1234
Product details Close detailsAthenaVariable Home Loan
Owner Occupier, Principal & Interest
2.84% p.a.
2.80% p.a.
Get the low rate you deserve with Athena, one of Australia's newest direct lenders. No fees and fee-free redraw. The same low rates for new and existing customers. Score loyalty bonus for making repayments. Min 20% deposit.
Variable Home Loan
Get the low rate you deserve with Athena, one of Australia's newest direct lenders. No fees and fee-free redraw. The same low rates for new and existing customers. Score loyalty bonus for making repayments. Min 20% deposit.
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2.84% p.a.
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2.80% p.a.
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$0
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$0.00
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$0.00
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yes - free
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yes - free
-
no
-
80.00%
-
$100,000
-
$2,000,000
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Variable Home Loan
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Promoted
Tic:Toc 2.79% p.a.
2.80% p.a.
$1234
Product details Close detailsTic:Toc Variable Home Loan
Owner Occupier, Principal & Interest
2.79% p.a.
2.80% p.a.
Tic:Toc’s award-winning online platform could save you thousands. No fees, fee-free redraws and an optional offset account for $10 per month. Minimum 10% deposit. Winner of a Mozo Experts Choice Award 2019 for Online Home Lender of the Year 2019.^
Variable Home Loan
Tic:Toc’s award-winning online platform could save you thousands. No fees, fee-free redraws and an optional offset account for $10 per month. Minimum 10% deposit. Winner of a Mozo Experts Choice Award 2019 for Online Home Lender of the Year 2019.^
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2.79% p.a.
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2.80% p.a.
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$0
-
$0.00
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$325.00
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yes - free
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yes - free
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Optional - $10 per month
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90.00%
-
$50,000
-
$2,000,000
-
Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Variable Home Loan
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Promoted
Well Home Loans 2.82% p.a.
2.86% p.a.
$1234
Product details Close detailsWell Home Loans Well Balanced
Owner Occupier, Principal & Interest, LVR <80%
2.82% p.a.
2.86% p.a.
Well Balanced home loan is a low rate home loan with free online redraw and no valuation fee. Purchase, Refinance or Equity Release purposes allowed. Best New Home Loan in Mozo Experts Choice Awards 2019.^
Well Balanced
Well Balanced home loan is a low rate home loan with free online redraw and no valuation fee. Purchase, Refinance or Equity Release purposes allowed. Best New Home Loan in Mozo Experts Choice Awards 2019.^
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2.82% p.a.
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2.86% p.a.
-
$785
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$0.00
-
$300.00
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yes - free
-
yes - free
-
Optional - $10 per month
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80.00%
-
$200,000
-
$2,000,000
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Variable
-
Principal & Interest
-
Owner Occupier
-
Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Well Balanced
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