CommBank follows suit in Big Four home loan rate cuts
Commonwealth Bank has cut interest rates across its fixed and variable rate home loans for new customers by up to 0.70% p.a.
CommBank’s three-year fixed rate home loan has fallen to 5.89% p.a. for owner-occupiers, which is the largest cut of 70 basis points.
Smaller cuts are also available on CommBank’s fixed rates with one, two and four year terms.
Here’s an overview of the changes to CBA’s fixed rate wealth package home loans for owner-occupiers paying principal and interest.
- 1 year cut by 20bp to 6.39% p.a. (8.27% p.a. comparison rate*)
- 2 years cut by 55bp to 6.29% p.a. (8.08% p.a. comparison rate*)
- 3 years cut by 70bp to 5.89% p.a. (7.80% p.a. comparison rate*)
- 4 years cut by 40bp to 6.29% p.a. (7.77% p.a. comparison rate*)
Note that CommBank’s wealth package home loans come with an annual fee of $395 – go to site for full details.
CBA’s variable rate home loans have also dropped by up to 0.20% p.a. For owner-occupiers with a deposit of at least 20% – that’s a loan-to-value ratio (LVR) of 80% – home buyers can now get an interest rate of 6.49% p.a.
Big Four make interest rate moves ahead of RBA
CBA’s rate cuts are in line with the bank’s forecast that the Reserve Bank of Australia (RBA) will reduce the cash rate in the coming months.
NAB and Westpac have also pulled back on fixed interest rates this August, while ANZ has yet to make changes.
With fixed rates on the move, Mozo’s spokesperson, Rachel Wastell, says that while there’s an opportunity for borrowers to save on interest by locking in a low fixed rate now, it’s important to carefully consider the pros and cons before deciding.
“Locking in a fixed rate now could get you a lower rate than the variable loans currently on offer, but three years is a long time to lock in rates when the RBA’s next rate move is most likely a cut,” she says.
“Think about it this way, if the RBA cuts the cash rate by 1% over the next three years, the current average variable rate of 6.80% could shift down to 5.80%. That’s lower than the three year fixed on offer from CBA, and lower than the current average fixed rate in the Mozo database.
“And if the variable rate leaders pass on those cuts in full, the leading variable rate, which is currently at 5.89% (as at 26 August, 2024) would drop to less than 5%.
“If that happens, any savings gained from locking in a low fixed rate now might be wiped out if variable rates drop below your fixed rate within the term,” says Wastell.
Before locking into fixed terms, compare home loan interest rates on Mozo to see what offers are available from big banks and smaller lenders.
* 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.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. 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.
^See information about the Mozo Experts Choice Home Loan Awards
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