Borrowers are ready for an interest rate shake-up today, with two banks moving to drastically cut variable rates on home loans for new customers while raising some fixed rates.
Commonwealth Bank Home Loan Changes
For the first time since September 2020, Commonwealth Bank cut interest rates on its variable home loans by up to 0.40 percentage points on Friday, with the biggest cuts going to new borrowers with larger deposits of at least 30% of the value of a property.
The bank also raised most fixed rates by 0.10 percentage points, except for its shorter one-year fixed rates, which saw cuts of up to 0.20 percentage points.
The changes bring its additional variable rate home loan down to 2.29% (2.30% comparison rate) for new borrowers with a 70% loan-to-value (LVR) ratio and principal and interest repayments . Borrowers with an 80% LVR would pay 2.39% (2.40% comparison rate) on the same loan after the cuts.
The ABC’s one-year fixed-rate loan has been cut by 0.10 percentage points, to 1.99% (4.10% comparison rate) for homeowners paying principal and interest .
ING’s home loan changes
ING has cut its variable interest rates for new homeowner borrowers and investors by up to 0.25 percentage points for those paying principal and interest.
The changes bring back ING’s Orange Advantage variable rate home loan with an offset account feature to 2.29% (2.64% comparison rate) for homeowners with loans over $150,000 and a LVR of 80% or less.
ING also raised most fixed rates for homeowners by 0.05 to 0.20 percentage points, but left all one-year fixed mortgage rates unchanged.
The bank’s new two-year fixed rate for homeowners paying principal and interest with an LVR of 80% is 1.99% (comparator rate 3.75%).
How do CBA and ING mortgage rates compare?
The list below shows the cheapest homeownership mortgage rates available for variable and fixed mortgages today, according to the Canstar database.
The average floating rate is 3.10%, for homeowners paying principal and interest on a $500,000 loan and an 80% LVR.
It might be beneficial for borrowers to compare home loans to see if they could get a better deal on their mortgage.
Canstar’s Lowest Home Loan Rates Database
- Variable: 1.77% (1.86% comparison rate), 60% variable rate loan for reduced home loans, maximum LVR of 60%
- 1 year fixed: 1.59% (2.15% comparison rate), loan of $150,000 and more on 1 year of Greater Bank discount rate, maximum LVR of 80%
- Fixed 2 years: 1.59% (2.10% comparison rate), loan of $150,000 and more over 2 years, loan of $150,000 or more from Greater Bank, maximum LVR of 80%
- Fixed 3 years: 1.79% (3.12% comparison rate)
- 4 years fixed: 2.15% (2.90% comparison rate), Illawarra Credit Union’s The Works Package Home Loan Fixed P&I 4 year Special Offer loan, maximum LVR of 95%
- 5 years fixed: 2.27% (2.05% comparison rate), Freedom Lend’s Freedom Fixed PI 5 years 70%, maximum LVR of 70%
Source: www.canstar.com.au – 15th October 2021. Based on homeowner home loans from Canstar database, available for loan amount of $500,000, all LVR and repayments of principal and interest; excluding introductory and home ownership loans only. The highest rate is selected based on the lowest interest rate, followed by the comparison rate. The comparison rate is calculated on the basis of a loan amount of $150,000 and a loan term of 25 years. Read the comparison rate disclaimer.
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