The Commonwealth Bank of Australia (CBA) has announced it will be reducing its owner-occupier standard variable rate for those repaying principal and interest. From 7 July, customers paying off their own homes will pay a lower standard variable rate of 5.22% per annum, a reduction of three basis points.
Around 80% of the bank's owner-occupier customers are repaying principal and interest. A customer with an average mortgage of $350,000 will save $78 a year.
CBA said it is supportive of the banking regulator’s moves to manage the level of growth and resiliency in the housing market. To meet its regulatory requirements, the bank has also announced it will increase variable interest only home loan rates for owner-occupiers and investors by 30 basis points.
Matt Comyn, group executive of retail banking services, said: “Paying off your home is important for Australians. For owner occupier customers repaying principal and interest, they can take advantage of the interest rate reduction to pay off their home loan faster. These changes also help us keep the right balance in our home loan portfolio, in line with what our regulators require.”
The bank is encouraging customers who currently make interest only payments to switch to principal and interest repayments if able. Switching loan types will attract no fees.
These interest only changes are not in response to the bank levy that was announced as part of the Federal Budget in May, the bank said.
The new rates will be effective from 7 July 2017.