Australia’s biggest home lender has cut its variable mortgage rates in a sign the Big Four banks are competing harder for new customers – with more official relief expected.
The Commonwealth Bank has trimmed its online-only mortgage by six basis points to 5.84 per cent for new customers.
This is now the equal lowest rate among the Big Four banks with Westpac and ANZ also having equally-low variable rates – in a sign lenders are getting even more generous as the cost-of-living crisis continues to affect those with a job who are more likely to be paying off a mortgage.
Canstar data insights director Sally Tindall said the Commonwealth Bank’s latest reduction was a sign of intensifying competition among the lending giants, ahead of the Reserve Bank’s next meeting on May 20.
‘CBA has dialled up the heat in the mortgage turf wars by matching two of its biggest competitors with a rate of 5.84 per cent,’ she said.
‘This move is fantastic for competition because when Australia’s biggest bank cuts its home loan rates it forces other lenders to sit up and take stock of their own.’
But the Commonwealth Bank’s lowest rate requires a bigger 40 per cent mortgage deposit, which is higher than Westpac’s 30 per cent and ANZ’s 20 per cent.
NAB’s ubank subsidiary also offers a 5.84 per cent rate while CBA offshoot Unloan has an even lower rate of 5.74 per cent.
Australia’s biggest home lender has cut its variable mortgage rates in a sign the Big Four banks will compete harder for new customers
NAB’s lowest online-only variable rate of 6.19 per cent was higher than its competitors but it allows borrowers to get in with a small five per cent deposit.
Smaller lenders have even lower variable rates with Pacific Mortgage Group offering 5.59 per cent compared with 5.64 per cent from Homestar Finance, People’s Choice, RACQ Bank, The Capricornian, Mortgage House and Australian Mutual Bank.
Ms Tindall said existing CBA customers paying more than six per cent on their variable rate mortgage now had leeway to negotiate a better deal.
‘If you are an owner-occupier with a variable mortgage with CBA, and your rate doesn’t start with a ‘5’, it’s time to ask the bank why?’
The latest reduction in CBA variable rates comes ahead of the Reserve Bank’s May 20 meeting, with the futures market expecting another 25 basis point rate cut that would take it down to 3.85 per cent for the first time since June 2023.
Financial markets are expecting the RBA to cut rates by another 100 basis points, from 4.1 per cent now to 3.1 per cent by Christmas for the first time since February 2023.
‘With the prospect of further cash rate cuts still firmly on the cards, potentially as soon as 20 May, variable rates could go well under 5.50 per cent in a matter of weeks,’ Ms Tindall said.
Headline and underlying inflation during the March quarter both fell with in the Reserve Bank’s two to three per cent target for the first time since late 2021.
Canstar data insights director Sally Tindall said the Commonwealth Bank’s latest reduction was a sign of intensifying competition among the lending giants, ahead of the Reserve Bank’s next meeting on May 20
This gives the Reserve Bank more scope to cut rates in a bid to boost a sluggish economy.
While the cost of living crisis is moderating, new Australian Bureau of Statistics data released on Wednesday showed self-funded retirees to be the only group whose living costs had gone up in line with the headline inflation rate of 2.4 per cent.
For everyone else, living costs have climbed by more than three per cent in the year to March, despite the re-elected government extending quarterly $75 rebates to the end of 2025.
Those with a job saw their living costs climb by 3.4 per cent because they are more likely to be renting or paying off a mortgage.
By comparison, aged pensioners saw a 2.9 per cent increase, compared with 3.5 per cent for those on government welfare.
