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CBA hikes variable rates but bucks trend and cuts fixed
Australia’s biggest home loan lender, CBA, has today increased select new customer variable rates, and cut 1- and 3-year fixed rates.
The variable rate increases of 0.05 percentage points are only for new customers taking out a basic home loan, changing the lowest rate for this loan to 6.34 per cent.
This is the sixth time CBA has increased the new customer rate on this loan in just over five months, in addition to the standard RBA hikes.
As a result, a new customer taking out the lowest rate Extra Home Loan today will be paying 0.47 percentage points more than someone who took out the exact same loan at the start of the year.
CBA Extra Home Loan – new customers only
For owner-occupiers paying principal and interest
| Deposit size | Old rate | New rate | Change % pts |
| 40% or more | 6.29% | 6.34% | +0.05 |
| 30% or more | 6.39% | 6.44% | +0.05 |
| 20% or more | 6.49% | 6.54% | +0.05 |
| 10% or more | 6.89% | 6.89% | – |
| Less than 10% | 7.59% | 7.59% | – |
Source: RateCity.com.au.
The RateCity.com.au database shows that since 1 March 2023:
- The big four banks have increased at least one new customer variable rate a total of 20 times.
- 87% of all lenders have increased at least one new customer variable rate in addition to the RBA hikes in March, May and June.
- This includes large banks such as Bendigo, Macquarie and AMP.
CBA breaks the trend, taking the knife to fixed
CBA has today cut its 1-year fixed rate by 0.15 percentage points, while the 3-year fixed rate has dropped by 0.35 percentage points.
CBA fixed rate changes
For owner-occupiers paying principal and interest
| Fixed term | Old Rate | New rate | Change |
| 1-yr | 6.74% | 6.59% | -0.15% |
| 2-yr | 6.84% | 6.84% | – |
| 3-yr | 6.64% | 6.29% | -0.35% |
| 4-yr | 6.69% | 6.69% | – |
| 5-yr | 6.69% | 6.69% | – |
Source: RateCity.com.au. Rates are for customers taking out a package loan which includes a $395 annual fee.
CBA’s move today goes against the tide. The RateCity.com.au database shows a total of 59 lenders have increased at least one fixed rate in the last month, while just 9 lenders have cut at least one fixed rate.
Lenders that have changed at least one fixed rate in the last month
| Fixed term | Lenders that have cut | Lenders that have hiked |
| 1-yr | 4 | 52 |
| 2-yr | 3 | 55 |
| 3-yr | 5 | 43 |
| 4-yr | 3 | 24 |
| 5-yr | 5 | 31 |
Source: RateCity.com.au. Note some lenders have changed more than one fixed rate.
RateCity.com.au research director, Sally Tindall, said: “After posting a record-breaking profit, CBA is back to hiking new customer variable rates in a bid to protect its interest margins.”
“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,” she said.
“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.
“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.
“If you are considering a fixed term, don’t get lured by news of rate cuts without doing a wider review of what’s on offer. It doesn’t matter how much your bank has dropped their rates, but rather what rate you’re signing up to.
“CBA might have the lowest fixed rate out of the big four banks, but its 3-year rate is still almost a full percentage point higher than the lowest offer in the market. On a $500,000 loan with 25 years remaining, opting for a big four bank could potentially end up costing you more than $15,000,” she said.
CBA’s 3-year fixed rate vs lowest 3-year fixed rate on the RateCity.com.au database
| Lender | 3-year fixed rate | Cost over next 3 years |
| CBA | 6.29% | $93,115 |
| Australian Mutual Bank | 5.33% | $78,047 |
| Difference | -0.96% | -$15,068 |
Source: RateCity.com.au. Notes: based on an owner-occupier paying principal and interest, fixing for 3 years with 25 years on their loan remaining. Includes upfront and ongoing fees but not discharge or government fees from previous lender if applicable.
Big four banks’ lowest advertised rates
| Fixed term | CBA | Westpac | NAB | ANZ |
| 1-yr | 6.59% | 6.49% | 6.59% | 6.54% |
| 2-yr | 6.84% | 6.39% | 6.54% | 6.54% |
| 3-yr | 6.29% | 6.39% | 6.39% | 6.39% |
| 4-yr | 6.69% | 6.39% | 6.59% | 6.49% |
| 5-yr | 6.69% | 6.69% | 6.69% | 6.59% |
| Basic variable | 6.34% | 5.99% for 2yrs then +0.40% | 6.34% | 6.19% |
| Discounted var. | 6.24% | 7.19% | 7.32% | 6.99% |
Source: RateCity.com.au. Rates are for owner-occupiers paying principal and interest. LVR requirements apply
Lowest fixed rates on RateCity.com.au
| Fixed term | Lender | Rate |
| 1-yr | The Capricornian | 5.45% |
| 2-yr | Australian Mutual Bank | 5.23% |
| 3-yr | Australian Mutual Bank | 5.33% |
| 4-yr | Qudos Bank | 5.84% |
| 5-yr | RACQ | 5.34% |
| Variable | Fire Service Credit Union /
Mortgage House | 5.39% |
Source: RateCity.com.au. Rates are for owner-occupiers paying principal and interest. LVR requirements apply. Australian Mutual’s rate is for first home buyers only.
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Product database updated 08 Jul, 2024
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