Commonwealth Bank has lifted fixed rates by a massive 1.4 percentage points for both owner-occupiers and investors on all fixed rate terms.
At the same, Australia’s biggest bank has slashed its lowest variable home rate by 0.15 percentage points, to 2.79%, but only for new customers with a 30% deposit.
The revised rates came less than two weeks after the bank increased rates for both new and existing variable customers by 0.5 percentage points, following the Reserve Bank’s double cash rate hike in June.
Sally Tindall, RateCity.com.au research director, said that CBA’s fixed rate hikes are anything but typical, as there hasn’t been a one-off hike of this size and scale from the bank in RateCity’s records.
“The bank is responding to the rising cost of fixed rate funding and a market that refuses to believe the RBA will stop hiking the cash rate at around 2.5%,” Tindall said. “Less than a year ago, CBA was still offering one fixed rate under 2%. Today the bank’s lowest fixed rate is just under 5%, while the majority are well over 6%. It’s incredible to see fixed rates move this dramatically in such a short space of time. The sub-2% fixed rates from 12 months ago now seem like a distant dream.”
Tindall said other banks are likely to follow in CBA’s wake.
“Westpac and NAB’s fixed rates are now, in many cases, over a percentage point lower. It’s only a matter of time before these banks hike fixed rates again,” she said. “While CBA might have turned its back on competition in the fixed rate sector, it has got its eyes squarely focused on reeling in new variable rate customers.”
Tindall said the cut to CBA’s Extra Home Loan brings the bank’s lowest variable rate down to a relatively competitive 2.79%, but “existing customers should think twice if they’re expecting to get this rate.”
“Once again, loyal customers are getting the raw end of the deal,” she said. “CBA customers on the Extra Home Loan should call up the bank and ask for this discount. If the bank doesn’t budge, it could be time for them to take their home loan shopping to a bank willing to lower their rate.”
