CBA slashes 40 points off flagship interest rate

by Mike Wood15 Oct 2021

CBA has made one of the biggest moves in months, slashed a mammoth 40 basis points of its basic variable rate This is thought to be the lowest basic variable rate that the bank has ever offered.

Australia’s biggest home loan lender will now offer customers with a lower than 70% loan-to-value ratio an interest rate of 2.29%.

The LVR 70-80% band rate has also been slashed, with 30 points coming off for a new home loan rate of 2.39%

Higher LVRs get a rate cut on 14 points, dipping their home loan rate with CBA under 3% to 2.99%.

The move will surely send shockwaves through the industry, as CBA rate cuts tend to be the trigger for wider rate cuts from other lenders.

READ MORE: APRA lending changes explained

It was not all cuts from CBA, however. They have put 10 points onto their fixed rates, with 2, 3 and 4-year rates all rising.

The only fixed rate to be lowered was their 1-year, which dropped below the symbolic 2% barrier to 1.99%.

Analysts are already suggesting that the changes in CBA’s home loan rates are as a result of APRA lending regulation changes

While cash rates have remained the same for months, APRA is trying to constrain risky lending via raising the buffer rate against which customers are assessed when applying for loans.

With CBA’s interest rate call today, they are staking their claim to their big deposit customers, who can refinance to this current home loan rate.

ING has also made a similar move, with their variable rate going down 25 points from 2.49% to 2.24% for owner occupiers, while fixed years have all risen.

A CBA spokesperson said: “We regularly review and monitor our products. Our competitive home loan rates remain at historic lows and continue to provide value for customers including our 1.99% p.a. fixed rate for 1 year (owner occupiers paying principal and interest in the Wealth Package).”

“Our customers have access to industry leading features including Home Loan Compassionate Care, CommBank Green Loan and Home-In and recently announced partnerships with energy retailer Amber, property management platform :Different, nbn provider More and fintech startup CoGo.”

“As part of our review, we are changing select headline fixed rates, taking into account elevated underlying funding costs and the broader economic recovery. We are also updating the discount for eligible new customers across our Extra home loan products.”

“We encourage customers to speak with their CommBank lender or broker to see how we can get them into their home faster.”