CommBank follows suit in Big Four home loan rate cuts

By Jasmine Gearie · · 2 min read
Fact Checked
Signage for the Commonwealth Bank of Australia.

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.

Michele Bullock, the governor of the Reserve Bank of Australia (RBA).
CommBank is still predicting the RBA will announce an interest rate cut by the end of 2024.

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.