Commonwealth Bank moves to slash rates in line with other major banks

Commonwealth Bank has moved to fall into line with other big lenders, slashing its fixed and variable rates.

The bank announced on Friday it would reduce some fixed rates by up to 0.7 percentage points, and new customer variable rates by 0.35 percentage points, following the lead of rate cuts by other banks in recent weeks.

CommBank did not, however, change its standard variable rate; but it slashed its basic home loan rate from 6.59 per cent to 6.44 per cent and its package home loan rate from 6.49 per cent to 6.34 per cent.

A CommBank spokesman told The Australian the new rate cuts, which are effective immediately, were “part of our ongoing review of our interest rates and market conditions”.

The move will bring CommBank closer to its peers, and Canstar director of data insights Sally Tindall said it would “put heat” in the market to ensure they’ve got “competitive new customer home loan rates”

“The fixed rate tide is continuing to turn as the cost of wholesale funding continues to drop. Over the last fortnight, a total of seven lenders have cut at least one fixed rate,” Ms Tindall said, The Australian reports.

“Despite this, most borrowers are opting to stay on a variable rate in anticipation of RBA rate cuts next year.”

In the past month, three of the big four banks cut at least one fixed rate. Ms Tindall expects ANZ, which held out, will soon follow suit.

“While it’s unclear just how far fixed rates will fall at this stage, it’s highly likely they’ve still got a way to go,” she continued.

“We expect to see more fixed rate cuts in the weeks and months ahead, as central banks across the globe cut official rates and wholesale funding pressures hopefully continue to ease.”

Central banks overseas are cutting their official interest rates well before Australia’s Reserve Bank. The US Federal Reserve is tipped to move lower in September.

After the rate slashing, CommBank now matches Westpac on its most competitive rate — 5.89 per cent for a three-year term.

Westpac announced it had lowered its owner-occupied and investment property fixed rate loan prices on Tuesday — from 6.69 per cent to 6.19 per cent for a one-year home loan, and 5.99 per cent on the principal and interest of a five-year loan (down 0.8 per cent).

NAB also cut its three-year fixed rate on home loans by 0.6 per cent to 5.99 per cent in July. It was the first of the big four to offer buyers a loan beginning with a five, a move Ms Tindall called “strategic” to see if there was “appetite among borrowers to revert back to fixing”.