CBA has cut through the 5% barrier, launching a 2-year fixed rate special of 4.99% (comparison rate 7.24%*) for owner-occupiers paying principal and interest with deposits of 30% or more.
The offer, announced Wednesday, marks the first time the bank has offered a rate in the ‘4s’ during this current cutting cycle. The special is only available for a limited time.
The move follows Westpac’s fixed rate cuts on Aug. 29, when its lowest advertised fixed rate dropped to 4.89% (comparison rate 5.88%*).
CBA’s sub-5% offer reflects a broader shift in the market. Canstar.com.au analysis shows more than 30 lenders now have at least one fixed rate under 5%. At the start of the year, none did.
The lowest available fixed rate currently sits at 4.64% from Pacific Mortgage Group and Australian Mutual Bank for a two-year term for owner-occupiers.
Sally Tindall (pictured), data insights director at Canstar.com.au, said the CBA move would attract attention, but came with strings attached.
“CBA has finally broken through the 5% barrier, but this new fixed rate comes with a catch,” Tindall said.
“At 4.99%, fixed for two years, CBA’s new loan looks attractive, however, it’s only for a limited time and borrowers need to be living in the home they own with at least 30% equity to be eligible.”
The Canstar leader added that CBA’s new offer was clearly designed to attract attention.
“CBA’s latest move is designed to turn heads. Being able to say it has a rate in the ‘4s’ will catch people’s eye but in reality, smaller lenders are offering rates as low as 4.64%,” Tindall said. “Fixed rates under 5% are no longer a rarity. At the start of the year there wasn’t a single one, now we’ve got more than 30 lenders in this space.”
Tindall said brokers should help clients look beyond the headline number.
“While the thought of a rate starting with a ‘4’ might be tempting, don’t just be swayed by the headline number,” she said. “Whether or not you should fix should also come down to your personal circumstances and appetite for certainty.”
Tindall also urged caution on time-limited deals.
“It’s also important to keep a cool head when it comes to limited time offers,” she said. “The mortgage market is flush with competition so don’t feel like there’s only one option available to you.”
The Reserve Bank of Australia has flagged at least one more cash rate cut, though the timing and number of cuts remains uncertain.
CBA economist Harry Ottley told Australian Broker that “the base case is for just one more cut in November,” adding that the economy is “picking up a little bit more quickly than expected” and further cuts into 2026 may not be needed.
Tindall said: “The RBA has said at least one more cash rate cut is likely, however, exactly how many will come our way and in what timeframe is still very much up in the air. With the monthly CPI indicator going in the wrong direction, the economy picking up pace and unemployment sitting at a relatively low level, the urgency for another cash rate cut just isn’t there at this stage.”
For borrowers weighing their options, she said fixing requires confidence in the rate chosen.
“For anyone tossing up between fixed and variable, understand what rates might do in the fixed term, but also know anything could happen so if you do lock in be happy with the rate come what may,” Tindall said.
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