Major bank unveils more rate cuts

by Julia Corderoy18 Aug 2014
Recent prognostication about the RBA's next move has seen a major bank make further cuts to its fixed rates.

Commonwealth Bank has announced reductions to its three and four year fixed mortgage rates. After starting the fixed interest rate wars when it cut its five-year fixed mortgage rate to a record low under 5%, Australia’s biggest bank has cut its three-year rate by 15 basis points to 4.94%, in line with NAB and ANZ.

CBA’s general manager of home loans, Clive van Horen told Fairfax Media that the rate cuts are in line with investor expectations about future Reserve Bank moves, due to economic weakness in recent weeks.

“The unemployment numbers that came out in Australia a few days back, that impacted the swap rate, so funding costs have dropped,” he said.

CBA has also cut its four-year fixed rate by 50 basis points to 5.09%. Since the bank first made rate cuts last month, van Horen told Fairfax Media the share of new mortgage customers taking out a fixed rate loan had increased from 13% to 20%. 

Three-year fixed rate loans are the most popular product, however the bank has had record proportions of customers locking in the five-year fixed rate loan, which is now at 4.99%.

 "It's well in excess of anything we've ever seen before because it is such a strong rate," van Horen said.