CommBank final big bank to increase home loan rates - set to make $608 million profit
Article by Kelly Emmerton
Commonwealth Bank has just announced increases to its variable rate home loans, effective from 8 May 2017.
The big bank raised the standard variable rate for owner-occupiers making principal and interest repayments by 3 bp, to 5.25% p.a.
That change is set to cost customers with a $300,000 home loan back an extra $2,160 over the life of a 30 year loan. Looking at the big picture, this change alone is set to earn CommBank an extra $5,396,802 per month, or $64,761,624 each year.
This is a relatively minor increase, and the new rate remains the lowest standard variable rate of the four major banks, all of which have now raised interest rates on their home loan products.Other changes include:
- The standard variable rate for owner-occupiers making interest only repayments rose by 25 bp to 5.47%
- The standard variable rate for investors making principal and interest loans increased by 24 bp to 5.80%
- The standard variable rate for investors making interest only repayments rose by 26 bp to 5.94%
All the increases combined will net CommBank an extra $608,257,541 per year - more than any of the other big bank’s increases.
The story behind the increases was much the same as we’ve heard from other big banks, citing rising lending costs and “regulatory responsibilities.”
Matt Comyn, Group Executive for Retail Banking Services, said that because the changes won’t come into effect until May, customers will have plenty of time to sort out their mortgage situation.
“We encourage customers to switch to principal and interest, where this meets their needs, so that they can continue to enjoy historically low rates,” he said.
Existing CommBank customers can switch from interest only to principal and interest only repayments free of charge, online or over the phone.
Another option for borrowers is to shop around for a better mortgage deal than what the big banks are offering. So if your budget is being hammered by rate hikes, head over to our home loan comparison to search for the best deals on the market.