CommBank slashes fixed home loan rates, but does it miss the mark?

By Katherine O'Chee ·

If you’re looking to take out a home loan with a big four bank, today could be your lucky day. The Commonwealth Bank has just slashed rates for its Fixed Home Loan by up to 30 basis points for owner-occupiers and up to 50 basis points for investors - and it’s a move that has allowed several of the big bank’s rates to beat the averages in Mozo’s database.^

Three of CommBank’s owner-occupier principal and interest (OO, P&I) fixed rates dropped by 30 basis points, including from 3.44% p.a. down to 3.14% p.a. (4.51% p.a. comparison rate*) for its 1-year term. This means that its 1-year fixed rate now sits 14 basis points lower than the database average, whereas previously it was 16 basis points higher!^

Meanwhile, for CommBank’s P&I option for investors, all available loan terms - 1 to 5 years - experienced rate cuts between 25 and 45 basis points. For instance, the 1-year fixed rate fell from 3.79% p.a. down to 3.34% p.a. (4.98% p.a. comparison rate*), and is now a whopping 28 basis points below the average, rather than 17 basis points above.^ 

RELATED ARTICLE: Home loan loyalty doesn't pay, says the RBA 

CommBank’s cuts come in light of its Profit Announcement two days ago which revealed it had a strong six months leading up to 31 December 2019. The big bank grew its home loan book by 4% during those six months and now makes up almost a quarter of Australia’s mortgage market!

Mozo’s Banking Expert, Peter Marshall explained that with this good news for CommBank in the backdrop, the fixed rate slashes don’t come as a surprise, as they’re likely part of the big bank’s efforts to build on last year’s profitable performance and sharpen its competitive edge. 

“They will be looking to leverage that strong result to continue growth in mortgage and deposits, and cutting fixed rates is an easy way to do that, as the lower rates only apply to new customers,” he said. 

CommBank’s fixed rate home loan

Loan typeRate cutOld rate (p.a.)New rate (comparison rate*) (p.a.)Database averages (p.a.)^
Owner-occupier (P&I)1 year: -0.30%

2 years: N/A

3 years: N/A

4 years: -0.30%

5 years: -0.30%
3.44%


3.14%


3.14%


3.64%


3.64%
3.14% (4.79%*)


3.14% (4.65%*)


3.14% (4.51%*)


3.34% (4.46%*)


3.34% (4.35%*)
3.28%


3.15%


3.17%


3.43%


3.44%
Owner-occupier (IO)1 year: -0.10% 

2 years: N/A

3 years: N/A

4 years: N/A

5 years: N/A
4.04%


3.94%


3.94%


4.14%


4.14%
3.94% (5.31%*)


3.94% (5.19%*)


3.94% (5.08%*)


4.14% (5.04%*)


4.14% (4.96%*)
Investor (P&I)1 year: -0.45%

2 years: -0.25%

3 years: -0.45%

4 years: -0.35%

5 years: -0.35%
3.79%


3.59%


3.79%


3.79%


3.79%
3.34% (5.33%*)


3.34% (5.15%*)


3.34% (4.98%*)


3.44% (4.86%*)


3.44% (4.73%*)
3.62%


3.47%


3.48%


3.77%


3.78%
Investor (IO)1 year: -0.50%

2 years: -0.40%

3 years: -0.40%

4 years: -0.50%

5 years: -0.50%
4.04%


3.94%


3.94%


4.14%


4.14%
3.54% (5.58%*)


3.54% (5.39%*)


3.54% (5.22%*)


3.64% (5.09%*)


3.64% (4.96%*)

But even with these sizable rate cuts, it may not be worth your time to get too excited, or to lock into a big bank mortgage just yet. 

One reason the CBA rates may not be such a great deal, is the revert rate, which is 4.80% p.a. for CommBank’s Fixed Home Loan (OO, P&I) and quite a steep rise from the intro rates - 152 basis points more than its 1-year fixed rate for owner-occupiers. 

To put this into perspective, let’s consider a scenario where you’ve taken out a home loan of $400,000 (OO, P&L, LVR 80%) over 25 years. While you could save $64 in monthly repayments over the fixed period thanks to CommBank’s rate cut, you would still have to pay an extra $353 in monthly repayments once the revert rate kicks in. 

Secondly, CommBank is still not leading the pack on fixed rates. There are over 30 lenders in our database who offer more competitive 1-year fixed rates for owner-occupiers below 3.00% p.a..^^ Sitting at the top of the list with a 1-year fixed rate of 2.74% p.a. (3.19% p.a. comparison rate*) is the Mozo Experts Choice Award winning UBank’s UHomeLoan (Fixed) which took out two awards for best Fixed Rate Home Loan and best Investor Fixed Home Loan. 

Ready to hop onto a great deal today? Check out some fixed rate home loan options below, or head over to Mozo’s home loans comparison table to compare deals from even more banks and get started on finding a home loan that suits you. Or you’re looking to invest in property, then make your first stop our investment loans comparison table!

Compare fixed home loans - page last updated October 17, 2020

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^Averages in Mozo's database, as of 14 February 2020. The average 1-year fixed rate for owner-occupier P&I home loans is 3.28% p.a., while the average 1-year fixed rate for investor P&I home loans is 3.62% p.a..

^^ Figures drawn from Mozo's database, as of 14 February 2020.

*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, loan amount and term entered. 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 Loans Awards

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Katherine O'Chee
Katherine O'Chee
Money writer

Katherine O’Chee is Mozo’s international money transfer and forex expert and business banking writer. She keeps Mozo’s readers on top of the latest news and writes in-depth features to inform and help Australians make smarter financial decisions. Her work has been published in major media outlets including Sydney Morning Herald, SBS News and Bangkok Post. She has a Bachelor of Arts (Media and Communications) from the University of Sydney.