CBA cuts home loan rates in bid to boost demand

The bank has also sliced 0.1 per cent off its investment loans with its two-year loan now sitting at 3.89 per cent, its three-year fixed at 3.99 per cent and five years at 4.39 per cent.

The cuts apply to principal and interest loans and are  “packaged” rates; where those applying for the loans have other products with the bank and apply to those taking out a new fixed-rate loan, not existing mortgages.

Lenders are under pressure as demand for home loans slows, house prices fall and after regulators forced a slowdown in the growth of investor loans that has since ended.

Figures on housing finance released on Tuesday by the Australian Bureau of Statistics showed that although there was an improvement during February over January,  the broader trend was down.

In seasonally adjusted terms, new lending commitments for owner-occupier dwellings was down 13.9 per cent for the year to the end of  February, while new lending commitments for investment dwellings was down 29.1 per cent over the same period.

“After a year and a half of subdued growth in home loans, the banks are hungry to bolster their books through competitive pricing,” said Sally Tindall, research director at comparison site RateCity.

“Australia’s biggest home loan lender is one of dozens of lenders looking to get new business in the door by dropping fixed rates,” she said.

While ANZ and Westpac are yet to change their fixed rates in 2019, CBA’s move comes a month after NAB made similar cuts for investors and owner occupiers.

“With many in the market predicting a cut to official interest rates this financial year, pressure is likely to continue to build on the big four to sharpen their rates even further,” said Kirsty Lamont, a director of comparison site Mozo.

“While it’s great to see another big four bank wield the axe on fixed rates, they are still a long way from being the most competitive in the market. If you really want to lock in a saving, online lenders are still the best bet,” she said.


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