CBA hikes select new customer rates beyond RBA + NAB drops cashback after 30 June

Existing borrowers with a CBA, NAB or ANZ variable home loan will see their interest rates rise by 0.25 percentage points today, as the RBA’s May hike takes effect.

Australia’s biggest bank, CBA, has used this opportunity to increase new customer rates by an additional 0.10 percentage points on its Extra and Wealth Package loans for deposits of 20 per cent or more.

As a result, some new customer rates have risen by 0.35 percentage points.

This is the third time the bank has lifted new customer rates on its Extra and Wealth Package mortgages since March.

CBA’s lowest home loan rates for new customers

For owner-occupiers paying principal and interest

Source: RateCity.com.au. Rates are for owner-occupiers paying principal and interest with a 60% loan-to-value ratio. Higher rates apply for smaller deposits. CBA Extra and Wealth package loans with less than 20% deposit have only risen by 0.25% pts.

NAB follows CBA by ditching cashback after 30 June

NAB has today announced it will be discontinuing its cashback after 30 June 2023. The news follows on from CBA’s announcement on Tuesday that it is ending its cashback at the end of this month.

This leaves Westpac and ANZ as the only big banks still set to offer cashbacks beyond June, however, this could change in coming weeks.

Big four bank cashback offers

Source: RateCity.com.au

RateCity.com.au research director, Sally Tindall, said: “The big four banks have been shuffling back from the refinancing fire since March of this year.”

“CBA’s decision to increase new customer rates by more than the RBA May hike is yet another indication competition in the mortgage market has become too hot to handle for Australia’s biggest bank,” she said.

“While existing customers will only see their rates rise by 0.25 percentage points, potential new customers with their eyes on a CBA loan could now find the bank’s rates are higher than they expected.

“NAB is following in CBA’s wake by announcing it’s axing its $2,000 cashback offer for refinancers after 30 June.

“Time will tell if Westpac and ANZ hold on to their cashback deals, but at this stage, the writing appears to be half-written on the wall.

“However, if either big bank wants to have a decent stab at pinching new customers, keeping these deals alive would help bring new business in.

“Borrowers looking for a sugar hit from a cashback deal with CBA and NAB will have a matter of weeks to get their refinancing paperwork. However, customers may well be better off shopping around.

“There are currently 29 lenders offering cashback deals, however, this number could drop significantly in the next couple of months if more lenders decide to follow in CBA and NAB’s wake,” she said.

RBA May hike to take 2 – 3 months to hit variable borrowers’ accounts

While CBA, NAB and ANZ variable rate borrowers will be charged a higher rate of interest from today, for many customers, the extra money will only start coming out of their bank accounts from July.

Westpac variable mortgage customers will see their rates rise from Tuesday (16 May).

Big four banks’ new lowest advertised rates – post May RBA

Source: RateCity.com.au. Rates are for owner-occupiers paying principal and interest. LVR requirements may apply to qualify. Westpac changes effective 16^th May.

More pain on the way?

Last Friday, ANZ confirmed it expects another 0.25 percentage point RBA hike, taking the cash rate to a peak of 4.10 per cent in August.

For someone with a $500,000 loan at the start of the hikes, their monthly repayments could rise to $3,469 by August of this year.

This would be a total increase to their monthly mortgage repayments of $1,134 – a 49 per cent rise.

Impact on the average borrower if the cash rate reaches 4.10% in August

Source: RateCity.com.au. Based on an owner-occupier paying principal and interest with 25 years remaining. Assumes borrower has not renegotiated their loan since the hikes began and that mortgage rates rise in line with ANZ’s cash rate forecast.

RateCity.com.au research director, Sally Tindall, said: “A twelfth rate hike, if it comes, could be the straw that breaks the camel’s back for some households, but the reality is, others will have broken before this.”

“While some families have savings buffers they can dip into to get them through, others are already cutting back on essentials to keep them out of the red,” she said.

“People with a mortgage should find out what their monthly repayments will rise to if there is another cash rate hike and check they can clear this extra hurdle, if it comes.

“If you can’t, put up your hand for financial assistance now before it’s too late.

“Asking your bank for a rate cut should be one of the first steps borrowers should take. Reaching out to a service like the National Debt Helpline is also a good idea as they can help you have some tough but important conversations with your bill providers,” she said.

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