Commonwealth Bank offers sub-5% fixed rate home loan

By Peter Terlato · · 2 min read
Fact Checked
Commonwealth Bank of Australia building

The Commonwealth Bank of Australia (CBA) has launched a new offensive in the fixed-rate home loan battle, becoming the second of the nation's Big Four banks to offer a headline rate under 5% p.a., as competition intensifies.

For a limited time, CBA is offering a 2-year fixed rate of 4.99% p.a. (7.24% p.a. comparison rate*) for eligible principal and interest owner-occupied home loans. This move follows Westpac, which was the first of the major banks to drop below the 5% threshold with its 4.89% p.a. (5.88% p.a. comparison rate*) two-year fixed rate.

Of the remaining Big Four, ANZ and NAB’s lowest fixed rates remain above 5%.

CBA’s loan is available to new borrowers as well as existing variable-rate customers who want to switch or fix a portion of their loan. To qualify for the special rate, customers must have a loan-to-value ratio (LVR) of 70% or less, meaning a minimum 30% deposit is required.

Borrowers must also qualify for a CommBank home loan wealth package, which requires a minimum combined lending balance of $150,000 across home loans or lines of credit.

CBA’s new fixed rate can be accessed by speaking with a qualified mortgage broker.

Don’t overlook smaller lenders offering lower rates

While the sub-5% rates from CBA and Westpac are a significant development from the major banks, borrowers should be aware that other lenders are still offering even lower rates. For example, some non-major lenders are advertising two-year fixed rates as low as 4.64% p.a. for eligible borrowers. These offers often have their own eligibility criteria, such as a maximum LVR.

While the fixed rate is appealing, remember that these loans have a variable revert rate once the fixed term ends. This rate is typically a standard variable rate, which can be much higher than your initial fixed rate. To ensure you're still getting a good deal, it's crucial to compare your options and either re-fix, negotiate a new rate, or refinance before your fixed term concludes.

*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 $150,000 over 25 years.