Major rate cut avalanche begins

by Julia Corderoy02 Aug 2016

The first of the major banks has responded to the Reserve Bank of Australia’s decision to drop the cash rate to a new historic low of 1.5% today.

Commonwealth Bank has reduced its standard variable rate mortgages by 0.13%, taking the rate for owner occupiers to a record low 5.22% for the bank. The SVR for investor loans will fall to 5.49%.

“While the circumstances of each RBA rate decision will always vary, we’ve carefully considered the current environment and the needs of both borrowers and savers,” said Matt Comyn, CBA group executive retail banking services.

“Today we’ve reduced our mortgage rates to a record low while increasing term deposit rates to provide an opportunity to the millions of Australians who rely on savings.”

Business customers with variable rate products will also benefit from a 0.13% rate reduction.

Over the past two years, the official cash rate has decreased three times, and during this period CBA home loan customers who are owner occupiers have had cumulative savings of about $939 a year on the average loan of $350,000, according to the bank.

The major’s fixed mortgage rates remain unchanged and all new rate offers announced today will be effective from Friday, 19 August.