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CBA, ING slash variable rates ahead of touted RBA move

by Reporter10 minute read

The lenders have reduced variable mortgage rates for both owner-occupiers and investors, amid speculation of a cut to the cash rate from the Reserve Bank.

The Commonwealth Bank of Australia (CBA) and ING have announced variable home loan rate reductions of up to 15 bps.  

CBA has cut P&I rates on its Extra Home Loan product by 10 bps for owner-occupiers and 15 bps for investors, effective from 25 September.

The major bank’s owner-occupied rates now start from 2.69 per cent (2.70 per cent comparison rate), with its investor rates now starting from 3.12 per cent (3.13 per cent).  


Meanwhile, ING has reduced owner-occupied P&I rates on its Mortgage Simplifier and Orange Advantage products by 10 bps, also effective from 25 September.

ING’s changes apply to home loans with a loan-to-value ratio up to 90 per cent and loan amounts above $150,000.

The non-major’s rates now start from 2.45 per cent (2.48 per cent comparison rate).

These rate changes come amid growing expectations of a cut to the cash rate from the Reserve Bank of Australia (RBA).  

Last week, Westpac chief economist Bill Evans and NAB Group Economics revised their monetary policy expectations, revealing that they now expect the central bank to announce further cuts to the cash rate in the coming months.

This came in response to remarks from deputy governor of the RBA Guy Debelle, who conceded that further cuts to the cash rate were “possible” as a means to accelerate the economic recovery from the COVID-19 crisis.

Mr Debelle’s remarks were perceived by Mr Evans as a “clear hint” that the central bank is preparing to adjust its monetary policy settings in a bid to complement fiscal stimulus announced in the federal government’s budget.  

According to Mr Evans, the RBA is set to cut the overnight cash rate from 25 bps to 10 bps while also adopting a 10 np three-year bond target, and adjusting the rate on new drawdowns of the term funding facility to 10 bps.

The Westpac economist said the central bank’s policy adjustments would form part of a coordinated effort between the central bank and federal and state governments, which are due to release their budgets in the coming months.

As such, Mr Evans expects the RBA to announce the changes on 6 October, the same day as the federal government’s budget announcement.

However, NAB Group Economics noted that the RBA may hold off on any changes until November, to ensure that it “communicates its messaging to a wider audience” undistracted by the government’s budget announcement.

NAB economists also stressed that while further cuts to the cash rate are expected, the RBA would refrain from employing negative interest rates, with the central bank previously stating that such a move would be “extraordinarily unlikely”.

[Related: Non-major lender cuts LMI to $0]

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