CBA cuts variable rates again – but existing customers miss out

CBA has today cut variable home loan rates in a bid to win new customers, however, existing borrowers have yet again missed out.

Australia’s largest bank has cut its basic home loan rate by 0.10 percentage points for owner-occupiers and up to 0.80 percentage points for investors. Its new lowest variable rate is now 3.69 per cent.

CBA lowest variable rate for owner-occupiers

This is the second time CBA has discounted variable rates for new customers since the RBA hikes began in May. The bank also cut its Extra Home loan rates on June 30 by 0.15 percentage points.

RateCity.com.au database analysis since the RBA hikes began in May:

• 24 lenders have cut at least one variable rate for new customers, including CBA, Westpac,NAB and ANZ.
• Of these, 5 lenders have cut variable rates twice in this time - CBA, ANZ, Macquarie Bank, ING and BankWest.
• Existing variable rate customers have seen their rates rise by 1.75 percentage points, with more RBA hikes expected.

How much could loyalty be costing borrowers?

If someone took out a $500,000 loan three years ago, on CBA’s lowest advertised variable rate and hasn’t haggled, they would currently be paying an estimated rate of 4.72 per cent.

In this time, CBA has cut its lowest variable rate six times for new customers. Unless the existing customer called up their bank and negotiated each time, they’ve missed out on a total of 1.03 percentage points of rate cuts.

By not getting these additional rate cuts, RateCity.com.au estimates the existing CBA customer has paid up to $5,000 extra in interest over the last three years.

RateCity.com.au research director, Sally Tindall, said: “Complacent variable rate customers have been whacked with 1.75 percentage points of rate hikes in the last four months, however, anyone willing to refinance is likely to have escaped some of these rises.”

“The latest ABS statistics show $17.9 billion dollars’ worth of loans were refinanced in July, the second highest level on record. By cutting new customer rates, CBA is doing what it takes to get more of this business,” she said.

“CBA has cut its lowest variable rate down to a competitive 3.69 per cent, yet not a single existing customer will get this discount unless they do something about it.

“Australia’s largest bank is not alone in offering up discounts to new business. A total of 24 lenders have now cut some variable rates for new customers since the RBA began hiking in May.

“Don’t bother getting mad with your bank, get even, by entering into some hard negotiations or switching to a lender that values your business more.

“The two lenders committed to charging the same rates for both new and existing customers are Athena and Nano. A noble pledge which worked well when rates were on their way down, but in this market it’s proving problematic. As a result, Athena and Nano’s lowest rates are now higher than CBA’s new customer rates,” she said.

Take the 5-minute loyalty test:

• Look up what rate you’re paying: Log onto your banking app or call your bank and ask. Make sure it includes the latest RBA hike.
• Check what your bank is offering NEW customers: look at your bank’s website to see their new customer rates.
• Use a comparison site: See what other lenders might be willing to offer for the same type of loan.

If you’re paying more, your bank has failed the loyalty test. It could be time to haggle or refinance.

Lowest variable rates on RateCity.com.au

Source RateCity.com.au. LVR restrictions may apply.

Big four bank lowest variable rates

Source RateCity.com.au. LVR restrictions may apply.

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