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

Tom Watson

02 Oct 2019

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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

  • Promoted

    loans.com.au

    2.63% p.a.

    2.65% p.a.

    $1234

    Product details Close details
    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.^ 20% deposit required. Limited time only.

    • 2.63% p.a.

    • 2.65% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 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 Home Loan 80

  • Promoted

    UBank

    2.59% p.a.

    2.59% p.a.

    $1234

    Product details Close details
    UHomeLoan - Discount Offer

    Enjoy a super low rate, $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Free redraw with flexible repayments. Min 20% deposit.

    • 2.59% p.a.

    • 2.59% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $0

    • $200,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the UHomeLoan - Discount Offer

  • Promoted

    Bank of Queensland

    2.69% p.a.

    2.86% p.a.

    $1234

    Product details Close details
    Economy Home Loan Discount Rate

    An ongoing low variable interest rate with free redraw, flexible repayment options and one free valuation. Discounted Economy variable rate available for owner occupier lending with max LVR of 70%.

    • 2.69% p.a.

    • 2.86% p.a.

    • $450

    • $10.00 monthly

    • $320.00

    • yes - free

    • yes

    • no

    • 70.00%

    • $450

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • $2,500 cashback when you refinance your home loan to BOQ, min $250,000, 70% LVR or less. Apply before 15 August 2020.

    Read our Mozo Review to learn more about the Economy Home Loan Discount Rate

  • Promoted

    Homestar

    2.39% p.a.

    2.39% p.a.

    $1234

    Product details Close details
    Star Essentials Home Loan

    Low Cost Home Loan 2020 winner.^ Packed with essentials like free redraw and extra repayments. No ongoing fees. Borrow $150K+. No construction loans. Fee waiver special offer - ends 31st July 2020.

    • 2.39% p.a.

    • 2.39% p.a.

    • $0

    • $0.00

    • $535.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $0

    • $150,000

    • $850,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Upfront fees waived up to $250 for valuation and up to $265 for legal documentation for applications received by 30 June 2020 and settled by 30 September 2020.

    Read our Mozo Review to learn more about the Star Essentials Home Loan

  • Promoted

    Yard

    2.39% p.a.

    2.42% p.a.

    $1234

    Product details Close details
    Variable Home Loan Winter Special

    Yard’s low-rate variable winter special home loan is packed with all features – unlimited additional repayments, free redraw, 100% offset account. Enjoy a simple online application. Special rate applies to home loan applications submitted by 31 July 2020.

    • 2.39% p.a.

    • 2.42% p.a.

    • $835

    • $0.00

    • $500.00

    • yes - free

    • yes - free

    • Optional - $10 per month

    • 80.00%

    • $835

    • $150,000

    • $850,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Special rate applies to home loan applications submitted by 31 July 2020.

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

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for the amount and term you entered.

**Initial monthly repayment figures are estimates only, based on the advertised rate, and a loan of $500,000 repaid over 25 years. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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