The first major bank responded to yesterday’s out of cycle cash rate cut mere minutes after the Reserve Bank of Australia’s (RBA) announcement.
CBA has expanded its support for small businesses and households through a range of new measures, part of which sees the major introducing its “lowest advertised interest rate ever”; however, despite expectations, the bank has only adjusted its fixed rates, leaving variable rates unchanged.
“These are unprecedented times, and they call for unprecedented measures,” said CBA CEO Matt Comyn.
“Following [the] reduction in the official cash rate by 25bps, we are taking deliberate steps to further support parts of the economy most in need.
“In particular, we want to ensure that we help keep small businesses open so that they can keep Australians employed, and that we do everything we can to support households and older Australians.”
CBA’s measures announced yesterday include:
“For home owners, we are announcing our lowest advertised interest rate ever – 2.29% p.a. fixed for one, two and three year terms for owner occupier customers on principal and interest repayments,” said Comyn.
“We are making this offer available to new and existing customers allowing them to lock in historically low rates."
The bank also announced plans to help up to 730,000 customers through reducing repayments to the minimum required under their home loan contract, from 1 May.
“On average, this will release up to $400 per month for customers and create up to $3.6bn in additional cash support for the economy,” Comnyn explained.
“Our owner occupier principal and interest customers are, on average, 37 months ahead on their home loan repayments. Customers will be able to opt out after the change is effective should they wish to keep their current repayments.”
CBA plans to contact customers with more information in early April, and has emphasised there is no need for customers to reach out before then.
“We understand the ongoing uncertainty as the nation responds to the challenges posed by the coronavirus. Australia has a strong financial system and economy, and we stand ready to support our customers, our people, our suppliers and the economy at this time,” the CEO said.
“Commonwealth Bank’s strong financial position means Australians can have confidence in our ability and willingness to support the country at this time.”
