0.13% drop: CommBank fails to pass on large portion of RBA rate cut to home loan customers

Tom Watson

02 Oct 2019

Commbank october rba cut content

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. Advertiser disclosure.

  • loans.com.au
    Mozo Expert Choice Badge" style="width:60px;">

    1.85% p.a.variable for 24 months and then 2.25% p.a.

    2.21% p.a.

    $1234

    Product details Close details
    Smart Booster Home Loan

    2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    1.85% p.a.variable for 24 months and then 2.25% p.a.

    2.21% p.a.

    New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.

    Smart Booster Home Loan

    New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.

    • 1.85% p.a.variable for 24 months and then 2.25% p.a.

    • 2.21% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • Optional - with 0.10% additional interest

    • 80.00%

    • $520

    • $50,000

    • $1,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Smart Booster Home Loan

    Details Close

  • Macquarie

    2.29% p.a.

    2.29% p.a.

    $1234

    Product details Close details
    Basic Home Loan

    Owner Occupier, LVR<60%, Principal & Interest

    2.29% p.a.

    2.29% p.a.

    Competitive low variable rate. No application or account management fees. Flexibility to split your loan and set different repayment types. Fee free withdrawals of your savings.

    Basic Home Loan

    Competitive low variable rate. No application or account management fees. Flexibility to split your loan and set different repayment types. Fee free withdrawals of your savings.

    • 2.29% p.a.

    • 2.29% p.a.

    • $0

    • $0.00

    • $400.00

    • yes - free

    • yes - free

    • no

    • 60.00%

    • $0

    • $150,000

    • $5,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Monthly

    Read our Mozo Review to learn more about the Basic Home Loan

    Details Close

  • Athena
    Mozo Expert Choice Badge" style="width:60px;">

    1.99% p.a.

    1.99% p.a.

    $1234

    Product details Close details
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    1.99% p.a.

    1.99% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required. Winner of three Mozo Expert's Choice Awards for 2021.

    Celebrate Variable Home Loan

    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required. Winner of three Mozo Expert's Choice Awards for 2021.

    • 1.99% p.a.

    • 1.99% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 60.00%

    • $0

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Celebrate Variable Home Loan

    Details Close

  • 86 400

    2.19% p.a.

    2.20% p.a.

    $1234

    Product details Close details
    Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    2.19% p.a.

    2.20% p.a.

    Competitive variable rate. Borrowers choose their repayment schedule (weekly, fortnightly or monthly) Make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

    Neat Home Loan

    Competitive variable rate. Borrowers choose their repayment schedule (weekly, fortnightly or monthly) Make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

    • 2.19% p.a.

    • 2.20% p.a.

    • $250

    • $0.00

    • $300.00

    • yes - free

    • yes - free

    • no

    • 60.00%

    • $250

    • $80,000

    • $5,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Neat Home Loan

    Details Close

  • Nano

    1.99% p.a.

    1.99% p.a.

    $1234

    Product details Close details
    Variable Home Loan

    Owner Occupier, Principal & Interest

    1.99% p.a.

    1.99% p.a.

    Refinance only. Super-fast digital application process. Zero upfront fees. No on-going service fees. Free 100% offset sub account. Comes with Visa debit card and the ability to use digital wallets; Apple and Google Pay. 25% deposit required.

    Variable Home Loan

    Refinance only. Super-fast digital application process. Zero upfront fees. No on-going service fees. Free 100% offset sub account. Comes with Visa debit card and the ability to use digital wallets; Apple and Google Pay. 25% deposit required.

    • 1.99% p.a.

    • 1.99% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • yes - offset sub account

    • 75.00%

    • $0

    • $100,000

    • $2,500,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Monthly

    Read our Mozo Review to learn more about the Variable Home Loan

    Details Close

^See information about the Mozo Experts Choice Home loans Awards