A major bank has announced mortgage rate reductions of up to 90 bps for both owner-occupiers and investors.
The Commonwealth Bank of Australia (CBA) has updated its New Wealth Package fixed rates for owner-occupied and investment home loans, for both new and existing customers switching to a fixed rate home/investment home loan as of Tuesday, 24 September.
The largest rate drop is for owner-occupiers with interest-only home loans on a five-year fixed rate, who will see rates drop by 90 basis points to 3.99 per cent, as will investors with an interest-only home loans on a four-year fixed rate.
Owner-occupiers with IO mortgages on one-year and four-year fixed rates will see rates drop by 65 basis points (to 3.89 and 3.99 per cent, respectively), while those with a three-year fixed rate will see their new rate start from 3.79 per cent (10 basis points lower than previous).
Other sizeable rate drops include investors with a four-year fixed rate on P&I repayments, who will see their interest rates fall by 75 basis points to 3.64 per cent.
Investors with P&I repayments on other fixed rate terms will see rates drop from between 5 and 50 basis points.
Owner-occupiers with a P&I home loan that is on a one-year fixed rate term will see a range change of 60 basis points, dropping the new rate to 3.29 per cent. Those with a four-year fixed rate will also see their rates drop by the same amount, bringing the new rate to 3.49 per cent.
ME has announced reductions of up to 49 basis points across its variable home loan products for investors.
The bank cut rates for investors on both principal and interest (P&I) and interest-only (IO) loans with a loan-to-value ratio of less than, or equal to, 80 per cent.
The changes have been applied to the “flexible home loan member package” for investors, as well as the “basic home loan” investor product, with all changes effective as of Tuesday, 24 September 2019.
The largest rate reduction (49 basis points) was applied to the bank’s basic home loan product, for investors making principal and interest repayments.
For investors on the bank’s basic home loan product, the new rates are as follows:
Investors currently on the flexible home loan package (which requires an annual fee of $395) will see the following changes:
The rate reduction announcement comes a week following ME bank’s 2019 financial year results, which saw its home loan portfolio grow by 7.3 per cent, from $24.5 billion to $26.3 billion (or 2.5 times system growth).
[Related: Major bank drops serviceability floor rate]
Hannah Dowling is a journalist for The Adviser and Mortgage Business.
Prior to joining Momentum Media, Hannah worked as a content producer for a podcast catering to property investors. She also spent six years working in the real estate sector at a local agency.
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