Ece Demir - 31 Mar, 2021

CBA offers lowest ever fixed rate home loan

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Commonwealth Bank (CBA) has announced its ‘lowest ever’ fixed interest rate for home and investment home loan effective Monday 22 March 2021.

After on-going pressure CBA has finally reduced its interest rates following in the footsteps of other big banks.

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The new offer is now a new low rate of 1.94% p.a.* 3.93^ (Comparison rate) for the two year Fixed Rate home loans for owner occupiers paying principal and interest in the Wealth Package.

This change places CBA’s home loan rates below the 2% mark – a history-making first for the lender.   

Several other packaged and non-packaged Commonwealth Bank home loans for owner occupiers and investor variations were also reduced by 10-30 basis points and increases of 20 basis points.

CommBank is offering the following new deals to all eligible customers:

  • 1.94% p.a.* (Principal and Interest) 3.93% p.a.^ (Comparison) on the 2 Year Fixed Rate home loan (Owner Occupied) with Wealth Package. This is CBA’s lowest ever advertised home loan rate.

    Note: This includes 0.15% p.a. discount with no establishment fee or monthly loan service fees (minimum package lending balance from $150,000).
  • 2.39% p.a. (Principal and Interest) 4.31% p.a. (Comparison) on the 3 Year Fixed Rate home loan (Investors) with Wealth Package. This is CBA’s lowest ever advertised investor rate.
  • New digital splitting tool in NetBank and the CommBank app

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The changes that have been introduced brings the Commonwealth Bank’s fixed rates for owner occupiers more in line with other major bank competitors, with both NAB and Westpac having already made reductions to their corresponding two-year fixed rate home loan offers.

Lenders have been competitive in racing to cut interest rates, with Westpac leading the charge by introducing a home loan rate of 1.79% in March.

NAB followed, by reducing its rate to 1.89%.

Canstar group executive of financial services, Steve Mickenbecker agreed pressure has been mounting on CBA and ANZ to match these numbers alongside the other major lenders.

“Commonwealth Bank’s lowest rate offer is currently 1.99% fixed for four years, a term that most borrowers find daunting,” Mr Mickenbecker said.

However, Commonwealth Bank suddenly raised its four-year interest rate, pushing it up 20 basis points to 2.34%, which is the first Big Four bank to increase its four-year fixed rate for owner occupiers since October 2019.

This increase is thought to be a response to the Reserve Bank of Australia’s decision not to raise its record low cash rate of 0.10%, for the next three years.

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“We know that customers are looking to lock in the certainty of fixed rates with around 40 per cent of new customers fixing their loans to take advantage of the current record low-rate environment,” says Michael Baumann, Executive General Manager, Home Buying.

“These changes allow homeowners and investors to take advantage of our lowest ever fixed rates, adding to our already market leading home lending solutions including the recently announced CommBank Green Loan.”

With three of the major ‘Big Four’ banks reducing rates, ANZ is the only one left to follow suit, placing the pressure now on the lender to make a move.

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Words by Ece Demir

Sources:

Important Information   * Terms and conditions, fees and charges, and normal lending criteria apply. Interest rate is correct as at last update. Interest rates to existing borrowers may vary to the advertised rate. Read more. ^ Comparison rate based on a loan of $150,000 over 25 years. WARNING: This comparison rate is true only for the example or examples given and may not include all fees and charges. Different terms, fees and other loan amounts may result in a different comparison rate.  
 

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