Interest rates, inflation: CBA slashes fixed rate as banks race to cut interest on mortgages
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The Commonwealth Bank of Australia has announced on Thursday it will slash fixed rate home loans by up to 0.40 percentage points across all fixed terms, but experts say it will not be enough to get Aussies to lock in.
The change will be in place from Friday, to coincide with a 0.25 cut in CBA's variable rate following the RBA cash rate cut earlier this month.
CBA's new lowest fixed rate will be 5.49 per cent for three years.
CBA to cut rates, experts say it's not enough. Picture: NewsWire / Luis Enrique Ascui
However, ANZ will retain the lowest one and two-year fixed rates among the big four banks.
National Australia Bank will also keep their crown of having the lowest three, four, and five-year fixed rates.
Canstar.com.au data insights director Sally Tindall said while CBA's rate cuts bring it closer to its competitors, they're unlikely to send customers rushing to move their business.
'Fixed rates have been falling fairly consistently this year and we expect this activity will continue as banks price in the increasing likelihood of further cash rate cuts,' Ms Tindall said.
'CBA's fixed rate cuts aren't groundbreaking, but rather a bid to inch closer to its key competitors.'
The move comes as all five major banks cut fixed rates after the RBA's decision earlier this month. Picture: NewsWire / Gaye Gerard
Ms Tindall said the announced rate cuts also may not be enough to incentivise Aussies to lock into fixed rate home loans straight away.
'With just a 0.10 percentage point difference (between variable and fixed interest rates), and the possibility of further RBA cuts ramping up, it's hard to see many people jumping at the chance to lock up their mortgage for the next three years,' she said.
'We expect banks big and small will continue cutting fixed rates over the next few months.
'The majors might have to offer a fixed rate in the '4's' if they're serious about getting people to lock in their rate.
Borrowers may need more incentive to Picture: NCA NewsWire / Luis Enrique Ascui
'If you're deciding between a fixed or variable rate, understand what might suit your finances and to some extent, your personality. When you make a decision, take the time to look for a competitive rate.'
Five major lenders, excluding CBA, have cut fixed rates since the RBA's decision, while 20 lenders have already cut one fixed rate this month, Canstar.com.au rate tracking shows.
A total of four lenders – BOQ, Community First Bank, Police Bank and Queensland Country Bank – are now offering at least one rate under 5 per cent at 4.99 per cent.
Originally published as Major Aussie banks to slash home loan rates
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