CommBank’s new 3.79% introductory offer for first home buyers: but proceed with caution
The Commonwealth Bank has launched a new introductory variable rate home loan offer of 3.79% (comparison rate 4.18%) available to first home buyers for the first four years of their loan. But Mozo Data Manager Peter Marshall has cautioned that first home buyers may find themselves with a higher rate sooner than they think.
CommBank’s Extra Home Loan 4 year introductory rate offer comes with a low introductory rate of 3.79% (comparison rate 4.18%), available for the first 48 months of the mortgage, reverting to 4.35% (comparison rate 4.18%).
However, because it is a variable rate offer and subject to change, Marshall said borrowers taking up the introductory offer shouldn’t count on it staying so low for the full 4 year period.
“While this rate is relatively low at the moment, keep in mind it is a variable rate offer, which means there’s nothing to say it won’t be completely different a week from now,” he said.
“With any variable rate home loan, the important thing is to keep an eye on your rate to be sure you’re not paying too much as different offers in the market change.”
The other thing for first home buyers to consider is whether an introductory offer really is better value than a low ongoing rate.
For example, the CBA Extra Home Loan offers the introductory rate of 3.79% for four years or a life-of-loan variable rate of 3.99%. According to Mozo’s home loan repayment calculator, opting for the ongoing low rate instead of the 4 year introductory offer would stand to save a borrower as much as $17,304 on a 25 year loan of $500,000 - that’s assuming the rates on offer don’t change in the meantime.
And with rates as low as 3.39% in Mozo’s database, borrowers could save even more by searching outside the big banks.
“Rather than a variable introductory offer, you may be better off choosing the lowest rate available to you, and then reviewing your loan every year or two to be sure it’s still competitive,” said Marshall.
And while borrowers shouldn’t immediately discount introductory offers - after all, this 4 year introductory offer is the second lowest variable rate from a big bank at the moment - they should be just as vigilant about checking in on their rate.
“If you are going to opt for an introductory offer, don't just sit back and assume you’re taken care of until the intro period ends. It’s vital that you still compare your rate to others in the market every so often and that you’re prepared to refinance if you need to,” Marshall said.
So if you’re looking for a first home loan, make sure to head over to our home loan comparison tool to check out some of the hottest offers around.