Commonwealth Bank cuts mortgage rates amid competitive market

Commonwealth Bank of Australia (CBA), the country’s largest home loan lender, has announced significant cuts to both fixed and variable mortgage rates for new customers.

Key points:

Fixed rates cut by up to 0.70 percentage points across 1-, 2-, 3- and 4-year terms
Select new customer variable rates reduced by up to 0.35 percentage points
CBA’s 3-year fixed rate now matches Westpac at 5.89%, the lowest among big four banks

Sally Tindall, Canstar Data Insights Director, commented on the move:

“CBA has made sweeping changes to both its fixed and variable rates in a bid to bring new business in the door,” Tindall said.

“This move from Australia’s biggest bank will put heat on the rest of the market to make sure they’ve got competitive new customer home loan rates.”

The rate cuts follow similar moves by other major banks:

Westpac cut fixed rates two days ago
NAB reduced its 3-year fixed rate by 0.60 percentage points in July

Despite these reductions, CBA’s rates remain higher than some smaller lenders. Canstar reports 13 lenders offering rates below 5.89% for a 3-year fixed term.

Tindall expects further rate cuts in the coming months:

“We expect to see more fixed rate cuts in the weeks and months ahead, as central banks across the globe cut official rates and wholesale funding pressures hopefully continue to ease.”

She noted that while fixed rates are becoming more competitive, most borrowers are still opting for variable rates in anticipation of potential RBA rate cuts next year.

The CBA’s standard variable rate remains unchanged, and these cuts apply only to new customers. However, Tindall advises existing CBA variable mortgage customers to contact the bank and request the new rates.