The Commonwealth Bank has raised select new customer variable rates and bucked the trend by slashing one- and three-year fixed rates
The Commonwealth Bank has raised select new customer variable rates and bucked the trend by slashing one- and three-year fixed rates.
Variable rate increases
Australia’s biggest home loan lender increased the variable rate it charges new customers by 0.05 percentage points on their basic home loan, bringing the lowest rate for this loan to 6.34%.
The CBA variable rate change will see new customers taking out the lowest-rate Extra Home Loan today pay 0.47 percentage points more than those who took out the same loan at the start of the year, RateCity.com.au reported.
“After posting a record-breaking profit, CBA is back to hiking new customer variable rates in a bid to protect its interest margins,” said Sally Tindall (pictured above), RateCity.com.au research director. “This is the sixth time the bank has increased the rate on its basic variable loan in the space of just over five months, as it looks to protect the returns rolling in as a result of the higher-rate environment.”
The RateCity.com.au database showed that since March 1, the big four banks have raised at least one new customer variable rate a total of 20 times, and that 87% of all lenders, including Bendigo, Macquarie, and AMP, have increased at least one new customer variable rate in addition to the RBA hikes in March, May, and June.
CBA takes the knife to fixed rates
CBA has reduced its one-year fixed rate by 0.15 percentage points, and its three-year fixed rate by 0.35 percentage points.
See the table below for CBA’s fixed rate changes.
This fixed-rate move from CBA bucked the trend, with the RateCity.com.au database showing that 59 lenders have raised at least one fixed rate in the last month, while just nine have cut at least one fixed rate.
“Interestingly, CBA has gone against the tide by cutting fixed rates, in a likely bid to encourage some nervous borrowers to lock in their rate for the next few years,” Tindall said. “Locking customers into fixed rates is an effective way to help curb the churn in the refinancing market, as borrowers are unable to refinance in the fixed rate period unless they pay a break fee.”
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