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
Macquarie2.54% p.a.
2.81% p.a.
$1234
Product details Close detailsMacquarieOffset Home Loan Package
Owner Occupier, LVR<70%, Principal & Interest
2.54% p.a.
2.81% p.a.
Handy offset account to help pay your home loan off sooner. Up to 10 offset accounts per loan account available. Fee free access at ATMs. Waived credit card annual fee. $0 international purchase fees.
Offset Home Loan Package
Handy offset account to help pay your home loan off sooner. Up to 10 offset accounts per loan account available. Fee free access at ATMs. Waived credit card annual fee. $0 international purchase fees.
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2.54% p.a.
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2.81% p.a.
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$0
-
$248.00 yearly
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$400.00
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yes - free
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yes - free
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yes
-
70.00%
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$0
-
$150,000
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$5,000,000
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Variable
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Principal & Interest
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Owner Occupier
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Monthly
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Read our Mozo Review to learn more about the Offset Home Loan
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Promoted
loans.com.au
2.48% p.a.
2.50% p.a.
$1234
Product details Close detailsloans.com.au Smart Home Loan 80
Owner Occupier, Principal & Interest
2.48% p.a.
2.50% p.a.
A low-rate home loan that could save you thousands, with no ongoing fees plus unlimited extra repayments and free redraws. Mozo Experts Choice Low Cost Home Loan 2020.^ You'll need to be borrowing $1 million or less and have at least a 20% deposit required.
Smart Home Loan 80
A low-rate home loan that could save you thousands, with no ongoing fees plus unlimited extra repayments and free redraws. Mozo Experts Choice Low Cost Home Loan 2020.^ You'll need to be borrowing $1 million or less and have at least a 20% deposit required.
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2.48% p.a.
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2.50% p.a.
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$520
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$0.00
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$0.00
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yes - free
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yes - free
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Optional - with 0.10% additional interest
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80.00%
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$520
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$50,000
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$1,000,000
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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 Smart Home Loan 80
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Promoted
HSBC 2.59% p.a.
2.60% p.a.
$1234
Product details Close detailsHSBC Home Value Loan
Owner Occupier, Principal & Interest
2.59% p.a.
2.60% p.a.
No ongoing fees. Free extra repayments and online redraw. Mozo Experts Choice Split Home Loan 2020^
Home Value Loan
No ongoing fees. Free extra repayments and online redraw. Mozo Experts Choice Split Home Loan 2020^
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2.59% p.a.
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2.60% p.a.
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$150
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$0.00
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$300.00
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yes - free
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yes - free
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no
-
80.00%
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$150
-
$50,000
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$7,500,000
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Variable
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Principal & Interest
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Owner Occupier
-
Weekly, Fortnightly, Monthly
-
-
-
Promoted
Athena 2.34% p.a.
2.34% p.a.
$1234
Product details Close detailsAthena Celebrate Variable Home Loan
<60% LVR, Owner Occupier, Principal & Interest
2.34% p.a.
2.34% p.a.
Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^
Celebrate Variable Home Loan
Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^
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2.34% p.a.
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2.34% p.a.
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$0
-
$0.00
-
$0.00
-
yes - free
-
yes - free
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no
-
60.00%
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$0
-
$100,000
-
$2,000,000
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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 Celebrate Variable Home Loan
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Promoted
Homestar 2.29% p.a.
2.32% p.a.
$1234
Product details Close detailsHomestar Star Essentials Home Loan
Owner Occupier, Principal & Interest
2.29% p.a.
2.32% p.a.
Low Cost Home Loan 2020 winner.^ A home loan packed with all the essentials and offering up to $1500 cashback and no ongoing fees. No Construction loans.
Star Essentials Home Loan
Low Cost Home Loan 2020 winner.^ A home loan packed with all the essentials and offering up to $1500 cashback and no ongoing fees. No Construction loans.
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2.29% p.a.
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2.32% p.a.
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$515
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$0.00
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$535.00
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yes - free
-
yes - free
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no
-
80.00%
-
$515
-
$150,000
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$850,000
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Variable
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Principal & Interest
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Owner Occupier
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Weekly, Fortnightly, Monthly
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Refinances receive up to $1,500 cashback or upfront fees waived on purchases for applications received by 31 October 2020 and settled by 31 January 2021.
Read our Mozo Review to learn more about the Star Essentials Home Loan
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