Major sneaks fixed rate cut to pip rivals

by Adam Smith28 May 2012

A major bank has quietly made cuts to its fixed rates, under-cutting its big four rivals.

Commonwealth Bank has cut fixed rates by up to 40bps. The bank announced cuts effective from last Friday, dropping its two-year rate 40bps to 5.79% and its four- and five-year rates by 35bps, to 6.29% and 6.39%, respectively.

The move has seen the bank undercut the other majors, and CBA executive general manager of retail banking Michael Cant told News Ltd an easing in the bank's funding profile allowed it to pip its competitors.

"We price our home loans off the swaps curve plus a margin for the cost of long-term funding. The margin is very, very expensive. We are paying about two percentage points above the swap rate. That hasn't really changed, but the swaps curve has come down in the past month because of the concerns about Europe and that has given us the opportunity to drop our rates," he said.