The Commonwealth Bank is set to reduce its fixed interest rates starting tomorrow, with decreases of up to 0.4 per cent across all fixed terms. This adjustment aligns with the Reserve Bank of Australia’s recent cash rate reduction, which also resulted in a 0.25 percentage point cut to variable mortgages.
As of the changes, the Commonwealth Bank’s lowest fixed rate for a three-year term will be 5.49 per cent, according to Canstar, a financial comparison website. In comparison, ANZ currently holds the title for the lowest one- and two-year fixed rates among the major banks, while NAB offers the most competitive rates for three, four, and five-year fixed loans.
These fixed rates are specifically available for owner-occupiers who are making principal and interest payments. Notably, before the Commonwealth Bank’s announcement, five lenders had already implemented fixed rate cuts following the Reserve Bank of Australia’s decision back in May. In total, Canstar reports that 20 lenders have reduced their fixed rates this month. Among these, four lenders, including BOQ, Community First Bank, Police Bank, and Queensland Country Bank, are offering fixed rates under 5 per cent, with Bank Australia providing a green home loan at an enticing 4.94 per cent.
Sally Tindall, director of data insights at Canstar, indicated that fixed rates have been consistently decreasing throughout the year and this trend is expected to persist as banks anticipate further cash rate cuts. She noted that although the Commonwealth Bank’s cuts may not be particularly significant, they are a strategic move to remain competitive with rival banks.
Tindall suggested that both major and smaller banks are likely to continue lowering fixed rates in the months to come. For major institutions, offering fixed rates in the four per cent range may become necessary to attract borrowers looking to lock in their rates. Some borrowers are eager to secure the stability of a fixed rate, while others may choose to wait for additional tax cuts that could yield even lower rates.
When deciding between fixed and variable rates, Tindall advises borrowers to carefully consider which option better suits their financial situation and individual preferences. She emphasises the importance of taking the time to find a competitive interest rate before making a final decision.