CBA only big bank yet to join latest round of home loan interest rate changes

Kelly Emmerton

26 Jun 2017

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Three out of four big banks have raised rates on interest-only home loans this month, leaving the Commonwealth Bank as the only one yet to make a move.

ANZ was the first of the big banks to announce rate increases, hiking the standard variable rate on interest-only loans by 0.30% to 5.57% in early June. Westpac followed suit last week, rising interest-only rates by 0.34% in a change that will take effect on June 30. NAB followed just a few days after, with a rate hike of 0.35% on interest-only borrowing.

At the same time, all three lenders also slashed rates for borrowers taking out principal and interest loans by as much as 0.08%, in a trend that has taken hold since APRA announced tighter restrictions around “risky” lending, such as low deposit, investment or interest-only loans.

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Now, it’s really a matter of when CommBank will fall in line with the trend and hike rates on its range of interest-only home loans. According to Mozo Data Manager Peter Marshall, the big four banks usually make similar pricing movements, so he expects that CBA will follow suit soon enough.

“In particular, CommBank won’t want to be seen as the only major bank not cutting rates on principal and interest borrowing, so there may be an extra incentive for CommBank to follow this trend,” he said.

While the rate cuts from the big banks were considerably smaller than the hikes on interest-only lending, they still mean thousands of dollars in savings for borrowers.

Customers taking out a 25 year, $500,000 principal and interest loan with NAB or Westpac are more than $7,000 better off thanks to the recent rate cuts while ANZ customers borrowing the same amount will pay over $4,000 less during the life of the loan, according to Mozo’s home loan repayment calculator.

Principal and interest rate cuts from the big banks

*Based on a $500,000 loan over 25 years, using the standard variable interest rate from each lender.

Compared to challenger brands offering low interest rates, however, the big banks are still an expensive choice. An ANZ customer on the lowest big bank standard variable rate of 5.20% will still pay $132,207 more in interest over the life of a 25 year, $500,000 loan than a borrower who snags a 3.64% rate with Mozo Experts Choice winner, loans.com.au.

Which just goes to show how important it is for borrowers to compare their options and shop around outside the big banks when searching for a home loan. So if you’re in the market for a home loan, take our mortgage comparison tool for a whirl, or check out some of the top variable rate options available below.

Top variable home loans - rates updated daily

  • Promoted

    UBank

    3.34% p.a.

    3.34% p.a.

    $1234

    Product details Close details
    UHomeLoan - Discount Offer

    Enjoy a low rate & no bank fees (on variable loans) from one of Australia's leading digital banks. Easy & fast to apply, you'll get free redraw with flexible repayments. Min. 20% deposit required. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category.

    • 3.34% p.a.

    • 3.34% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes

    • no

    • 80.00%

    • $200,000

    • $699,999

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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

  • Promoted

    Bank of Queensland

    3.54% p.a.variable for 24 months and then 4.01% p.a.

    4.06% p.a.

    $1234

    Product details Close details
    2 Year Intro Rate Variable Home Loan

    Choose weekly, fortnightly or monthly repayments to align with your pay cycle or budget needs. Make additional repayments anytime to reduce the interest on your loan and pay your loan off sooner. Available for construction loans.

    • 3.54% p.a.variable for 24 months and then 4.01% p.a.

    • 4.06% p.a.

    • $150

    • $10.00 monthly

    • $320.00

    • yes - free

    • yes

    • yes

    • 90.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the 2 Year Intro Rate Variable Home Loan

  • Promoted

    HSBC

    3.47% p.a.

    3.48% p.a.

    $1234

    Product details Close details
    Discounted Home Value Loan

    As of 22nd July HSBC will be reducing this rate to 3.27% p.a.* (3.28% p.a. comparison rate^) so enquire now and be one of the first to make the most of this great rate. Enjoy unlimited free extra repayments and no ongoing service fees when you apply by 31 July (t&cs apply). Get help with the application process with an HSBC relationship manager. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category.^

    • 3.47% p.a.

    • 3.48% p.a.

    • $150

    • $0.00

    • $300.00

    • yes - free

    • yes - free online

    • no

    • 90.00%

    • $50,000

    • $7,500,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Discounted Home Value Loan

  • Promoted

    IMB Bank

    3.54% p.a.

    3.57% p.a.

    $1234

    Product details Close details
    Budget Home Loan

    Start with only 10% minimum deposit. Unrestricted additional repayments and free redraw facility.

    • 3.54% p.a.

    • 3.57% p.a.

    • $350

    • $0.00

    • $350.00

    • yes - free

    • yes - free

    • no

    • 90.00%

    • $75,000

    • $5,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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

*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.

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