Emergency RBA cut: CommBank first big bank to slash fixed home loans and business loans
Thursday 19 March 2020
In a surprise move, Commonwealth Bank has announced a huge 0.70% cut across its 1, 2 and 3 year fixed home loans, just minutes after the RBA’s decision to bring down the official cash rate to an historic low of 0.25%.
From May 1, CommBank’s fixed rate will sit at 2.29% for new owner occupiers making principal and interest repayments as well as existing variable home loan customers who switch to the fixed rate option.
This means its 3-year fixed home loan will soon be the lowest in the Mozo database, overtaking current leaders Police Bank (2.39%) and AMP (2.49%).
However, the big bank’s variable home loan rates will remain unchanged.
In a statement released this afternoon, CommBank Chief Executive Officer, Matt Comyn said the decision comes in response to the recent coronavirus outbreak.
“We understand the ongoing uncertainty as the nation responds to the challenges posed by the coronavirus,” he said.
“Following today’s reduction in the official cash rate by 25bps we are taking deliberate steps to further support parts of the economy most in need.”
“In particular, we want to ensure that we help keep small businesses open so that they can keep Australians employed, and that we do everything we can to support households and older Australians.”
More financial relief for households and small businesses
In addition, CommBank announced it will reduce repayments to the minimum for all existing variable home loan customers on principal and interest. Customers who wish to keep their existing repayments can opt out from May 1.
According to the bank, this will free up $400 per month for each customer - or a total $3.6 billion to inject back into the Australian economy.
CommBank will also increase 12-month term deposits by 60 basis points to 1.70%, effective from March 19 on balances from $5,000 up to $2 million.
This will be available to all new and existing customers, and according to Comyn, “will especially benefit older Australians relying on their savings”.
“It will ensure all Australians are now able to earn a return on their savings which is more than 1.45% higher than the official cash rate,” he said.
Meanwhile for small business customers, CommBank will slash 100 basis points from all existing cash-linked small business loans, effective from 3 April.
This builds on other CommBank measures introduced last week to support businesses facing financial difficulty in light of the coronavirus, including fee waivers and deterred repayments.
For more details on how various banks are supporting customers in need of financial support, check out our emergency coronavirus relief packages guide.
And stay tuned for more details on which banks have slashed their home loan rates following the emergency RBA cut.