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CBA home loan shake-up: lowest variable rate now 2.29%

CBA home loan shake-up: lowest variable rate now 2.29%

The escalating war on variable home loan rates has today intensified with CBA and ING taking the knife to these rates.

CBA has cut its lowest variable rate by 0.40 per cent to 2.29 per cent, while ING has dropped its lowest variable to 2.24 per cent. These rates are for owner-occupiers paying principal and interest.

Both banks have also made sweeping changes to fixed rates – the majority of which are hikes.

CBA variable rate changes: owner-occupiers

With risky home lending on the rise, CBA has returned to offering lower rates to customers with big deposits, like its big four bank competitor Westpac.

Loan

Old rate 

New rate 

Change 

Basic variable (Extra Home Loan LVR < 70%)2.69%2.29% -0.40%
Basic variable (Extra Home Loan LVR 70%-80%)2.69%2.39% -0.30%
Basic variable (Extra Home Loan LVR 80%-95%)3.13%2.99%-0.14%

Note: Above rates are for owner-occupiers paying principal and interest.

CBA fixed rate changes: owner-occupiers

CBA has cut its 1-year fixed rates by 0.10 per cent and hiked its 2-, 3- and 4-year fixed rates by 0.10 per cent for owner-occupiers paying principal and interest. 

As a result, CBA’s 2-year fixed rate is now back above 2 per cent, however, the bank is still offering one fixed rate under 2 percent, albeit for one year.

Loan

Old rate 

New rate 

Change 

1-year fixed 2.08% 1.99% -0.10% 
2-year fixed 1.99% 2.09% +0.10% 
3-year fixed 2.19% 2.29% +0.10% 
4-year fixed 2.29% 2.39% +0.10%

Note: Above rates are for owner-occupier paying principal and interest on a package rate with an annual fee of $395.

Analysis of RateCity.com.au:

  • 28 lenders have cut at least one variable rate in the last month (1 lender hiked).
  • 48 variable home loan rates are now under 2 per cent.
  • There are now 200+ fixed and variable home loan rates under 2 per cent.

Analysis of the RateCity.com.au database shows 28 lenders have cut at least one variable rate in the last month, whereas just one lender has hiked in this time. 

RateCity.com.au research director, Sally Tindall, said competition in the home loan market had put pressure on CBA and ING to cut their variable rates. 

“These variable rate cuts are the result of competition in the market. Both CBA and ING have today posted their lowest ever variable rates,” she said.

“After the last two cash rate cuts, the majority of banks left their variable rates untouched. However, recent cuts by Westpac and other lenders willing to break ranks has put pressure on the rest of the pack.

“Government regulators have asked the banks to reassess their risk appetites, so it’s no surprise CBA is actively looking to attract ideal borrowers with big deposits.

“The catch is, these variable rate cuts are only for new customers, not existing ones.

“Current CBA and ING variable rate customers should pick up the phone to their bank and ask them to pass on today’s rate cuts.

“While competition is dragging variable rates down, fixed rates are still on the rise with both CBA and ING hiking rates with terms of two years and above.

“CBA is factoring in a rise to the cost of funding within the next two years, despite the RBA’s insistence the cash rate will stay put until at least February 2024. 

“With the easing of restrictions in NSW and vaccination rates surging, the bank is expecting the economy will rebound quickly.

“CBA now has just one rate under 2 per cent and it’s only for owner-occupiers looking to fix for 12 months.

“This might help with the bank’s marketing, but it’s not going to be particularly useful for customers looking for the certainty a fixed rate can bring,” she said.

ING variable rate changes: owner-occupiers

Rate type

Old rate 

New rate 

Change 

Variable 2.49% 2.24% -0.25%

Note: Above rates are for owner-occupiers paying principal and interest with < 80% LVR. Loans over $1m are now offered the same rate.

ING fixed rate changes: owner-occupiers

Loan

Old rate 

New rate 

Change 

1-year fixed 2.04% 2.04% 
2-year fixed 1.84% 1.89% +0.05% 
3-year fixed 1.89% 2.09% +0.20% 
4-year fixed 2.34% 2.54% +0.20%

Note: Above rates are for owner-occupier paying principal and interest on a package rate with an annual fee of $395.

Lowest rates on the RateCity.com.au database

Loan

Lender 

Rate 

1-year fixed Greater Bank, Bank of us 1.59% 
2-year fixed Greater Bank1.59% 
3-year fixed Community First Credit Union1.79% 
4-year fixed Illawarra Credit Union2.15% 
5-year fixed Freedom Lend2.27%
VariableReduce Home Loans1.77%

Source: RateCity.com.au Note: Rates are for owner-occupiers paying principal and interest. Some LVR and location requirements apply. 

Lowest big four bank owner-occupier home loan rates

Loan

CBA 

Westpac* 

NAB 

ANZ 

1-year fixed1.99%1.99%2.09%2.04%
2-year fixed 2.09%1.89%1.99%1.94%
3-year fixed2.29%1.98%2.18%2.04%
4-year fixed 2.39%2.49%2.49%2.49%
5-year fixed2.99%2.79%2.79%2.69%
Variable2.29%1.99% for 2 yrs then 2.49%2.69%2.72%

Source: RateCity.com.au. *Note: CBA and Westpac rates are for a loan to value ratio of up to 70%.

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This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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