Commonwealth Bank Of Australia (ASX:CBA) Cuts Fixed Rate Mortgages & Business Loans, Variable Rates Unchanged

November 04, 2020 12:30 PM AEDT | By Team Kalkine Media

Commonwealth Bank Of Australia (ASX:CBA) Cuts Fixed Rate Mortgages & Business Loans, Variable Rates Unchanged

Interest Rates on Mortgages Slashed

According to the latest Commonwealth Bank news, the cost of a range of fixed rate housing loans and business loans including those tapping the Government's SME loan guarantee scheme, has been sliced.

RBA chose to reduce the interest rate on the Term Funding Facility (TFF) and cut the target for the yield on the 3-year Australian government bond, while insinuated no plans to raise the cash rate for a minimum of three years. The Commonwealth Bank of Australia believes that this strategic move might lower the structure of interest rates and provide confidence that Australians can borrow over the long term at historically low rates.

However, standard variable rates on CBA mortgages remain unchanged, as banks encounter a squeeze on their net interest margins (the difference between what they pay depositors and charge borrowers).

Besides, the Commonwealth Bank of Australia has also pledged to a moratorium on home foreclosures up until September 2021. The decision follows pressures from Financial Counselling Australia, that openly called for lenders to prevent forced home sales for borrowers shaken by the pandemic.

CBA also informed that is not offering reduced rates to property investor borrowers.

Interest Rates Cut on Business Loans

Moving onto business loans, the Commonwealth Bank of Australia has reduced its business loan rates for both secured and unsecured business loans that use the Government’s SME loan guarantee scheme.

The Bank is affirmative of the fact that its customers want certainty, which the cuts may provide in the form of highly competitive interest rates for terms of three to five years. Besides, they could even support many small businesses get through the ongoing challenges and place them back on the road to recovery and growth.

New Rates

Refer to below highlights of the Commonwealth Bank of Australia’s rate changes-

100 basis points reduction to 1.99% on new 4-year fixed-rate home loans for owner occupiers paying principal and interest.
15 basis points reduction to 2.14% on 2 as well as 3-year fixed-rate home loans for owner occupiers paying principal and interest.
10 basis points reduction to 2.19% on new 1-year fixed-rate home loans for owner occupiers paying principal and interest.
99% secured along with 3.99% unsecured business loan rates via the Government's SME loan guarantee scheme, a decrease of ~51 basis points.
49% rates on new 3, 4 and 5-year fully secured BetterBusiness loans, a reduction of ~50 basis points.

CBA shares fell 0.6% to $69.38 (11:09 AM AEST) on 4 November 2020.

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