CBA follows on Westpac's heels with interest rate change
The Commonwealth Bank has slashed principal-and-interest rates for owner-occupiers and increased interest-only rates as pressure on investors builds.
The lender, which holds a quarter of all mortgages in Australia, will reduce its standard variable rate for owner-occupiers by three basis points to 5.22%pa.
This will save a customer with an average mortgage of $350,000 about $78 a year.
About 80% of owner-occupier customers are repaying principal and interest, says Commonwealth Bank.
Variable interest-only home loan rates for owner-occupiers and investors will increase by 30 basis points.
|Variable rates||Current||New from July 7|
|Standard Owner-Occupied Principal and Interest||5.25% pa||5.22% pa||-3bps|
|Standard Owner-Occupied Interest Only||5.47% pa||5.77% pa||+30bps|
|Standard Investor Principal and Interest||5.80% pa||5.80% pa||-|
|Standard Investor Interest Only||5.94% pa||6.24% pa||+30bps|
The changes "help us keep the right balance in our home loan portfolio, in line with what our regulators require", says Matt Comyn, group executive of retail banking services.
Commonwealth Bank is encouraging customers to switch from interest-only payments to principal and interest repayments.
The new rates will apply from July 7.
It comes just a week after Westpac reduced its variable rate by eight basis points to 5.24% in a bid to lure customers into switching to paying principal and interest.