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

Kelly Emmerton   |   26 Jun 2017

redactor/hero-images/39/cba-rate-rise-big-banks_content.jpg

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.

RELATED: Sydney house prices tipped to go south - but when will the bubble burst?

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.

Variable rate home loan comparisons on Mozo - rates updated daily

  • Essentials Variable 80

    Owner Occupier, Principal & Interest

    3.64% p.a.

    3.66% p.a.

    A low-rate home loan that could save you thousands. No monthly or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount

    • 3.64% p.a.

    • 3.66% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $50,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

  • UHomeLoan - Discount Offer

    Owner Occupier, Principal & Interest

    3.59% p.a.

    3.59% p.a.

    A low rate Home Loan with no bank fees on variable rate loans. Easy & fast to apply. Choose between flexible repayments and make extra repayments for free on a variable rate home loan.

    • 3.59% p.a.

    • 3.59% 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

    Details Close

  • Select Basic Variable

    LVR<80%, Owner Occupier, Principal & Interest

    3.69% p.a.

    3.70% p.a.

    A competitive rate with no ongoing fees. Reduce interest by making additional payments.

    • 3.69% p.a.

    • 3.70% p.a.

    • $330

    • $0.00

    • $535.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $100,000

    • $5,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Fortnightly, Monthly

    Details Close

  • Discounted Variable Home Loan

    Owner Occupier, Principal & Interest

    3.82% p.a.

    4.22% p.a.

    Experts Choice - Australia's Best Customer-Owned Banking & Home Lender of the Year 2018

    • 3.82% p.a.

    • 4.22% p.a.

    • $0

    • $395.00 yearly

    • $0.00

    • yes - free

    • yes - free

    • yes

    • 95.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

  • Low Rate Home Loan with Offset

    LVR<80%, Owner Occupier, Principal & Interest

    3.68% p.a.

    3.71% p.a.

    A Low Rate Home Loan with a $0 Application Fee, Free Redraws & Extra Repayments

    • 3.68% p.a.

    • 3.71% p.a.

    • $286

    • $0.00

    • $300.00

    • yes - free

    • yes - free

    • yes

    • 80.00%

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

*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.

Mozo may receive advertising fees from the financial institutions, issuers of financial or credit products and third party advice providers that are shown on this page. These fees are based on a cost per click, cost per acquisition, or a fixed fee.