Big bank’s bombshell rate cut move

Australia’s biggest lender CBA has upped the ante in the home loan market, putting in up to 0.45pp in cuts. Picture NCA Newswire/ Gaye Gerard

One of Australia’s big four banks has just dropped a financial bombshell, slashing interest rates further than the Reserve Bank went – effective immediately.

Hot on the heels of RBA’s 0.25 per cent cash rate move this month, the Commonwealth Bank put in a huge 0.45 percentage point fixed rate cut, effective Friday.

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How the big four banks stand Friday. Picture: Canstar.

A CBA spokesman told News Corp “effective today, we will reduce Fixed Rate Home Loan interest rates for new lending by up to 0.45 per cent p.a.”

”As Australia’s largest lender, we remain committed to delivering value through a diverse range of home loan options, supported by expert advice and digital tools designed to meet the evolving needs of our customers.”

The biggest drop was reserved for its interest only two year fixed rate investment home loan, which was cut 0.45pp to 5.69 per cent, though its lowest fixed offering was on a two year principal and interest loan for owner-occupiers which dropped 0.30pp from 5.59pc to 5.44pc Friday.

It has also amped up the pressure on competitors via a new Digi Home Loan offering, where CBA has brought in its lowest variable rate for new owner-occupied home loans at 5.34 per cent.

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Canstar Data Insights director Sally Tindall.

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Given the pressure on Aussie households in the past year, the interest rate cuts come as welcome relief for many, with Canstar data insights director Sally Tindall saying a typical borrower had now saved the equivalent of a trolley of groceries in repayment costs.

“For a typical borrower with a $600,000 mortgage, they’re looking at a total relief package of around $272 a month after what’s now been three cuts. That’s the equivalent of one trolley-full of groceries every single month,” she said.

The CBA moves make it equal first with Westpac for the lowest variable rates of the big four banks at 5.34pc, while the lowest fixed rates of the top majors was held equally by NAB and ANZ at 5.19pc. All four are still lagging the market leading rate which is currently 4.99pc.

ANZ and CBA kicked in their new variable home loan rates for existing customers Friday, by 0.25 percentage points on the back of last week’s RBA decision, while NAB and Westpac variable home loan customers will have to wait until next Monday and Tuesday respectively for their cut to begin, Ms Tindall said.

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