If you’re a homeowner or thinking about refinancing, there’s some big news from the banking world that could mean more money in your pocket.
The Commonwealth Bank of Australia (CBA), the nation’s largest mortgage lender, has just announced a significant cut to its home loan interest rates, heating up what’s being called a ‘mortgage war’ among the big four banks.
But before you start celebrating, there are a few important details to know.
What’s changed? The new CBA rate explained
CBA has dropped its owner-occupier, principal and interest variable rate loans to 5.84 per cent—matching the lowest rates currently offered by Westpac and ANZ. This move is designed to attract new customers and keep pace with fierce competition in the home loan market.
But there’s a catch:
Digital-only: The new rate is only available for customers who apply online.
Big deposit required: You’ll need a hefty 40 per cent deposit to qualify.
New customers only: Existing CBA mortgage holders won’t automatically get this rate unless they refinance.
So, while this is great news for new borrowers or those willing to switch, existing customers will need to take action if they want to benefit.
Why are banks slashing rates now?
With the Reserve Bank of Australia (RBA) widely tipped to cut the official cash rate at its next meeting, banks are jostling for position to attract new business.
According to Canstar’s data insights director, Sally Tindall, CBA’s move is ‘fantastic for competition’ and puts pressure on other lenders to review their own rates.
‘When Australia’s biggest bank cuts its home loan rates, it forces other lenders to sit up and take stock of their own,’ Ms Tindall said.
Even if you’re not a new customer, you can use these new offers as leverage when negotiating with your current lender.
How does CBA’s offer compare?
CBA, Westpac, and ANZ: All three now offer a 5.84 per cent variable rate for new, online applicants with a 40 per cent deposit.
Offset accounts: CBA and ANZ allow you to add an offset account for $10 a month, which can help reduce the interest you pay over time. Westpac’s offer does not include this feature.
Subsidiaries: CBA’s Unloan offers an even lower rate at 5.74 per cent, while NAB’s ubank matches the 5.84 per cent rate.
And it’s not just the big banks—Canstar reports that more than 35 lenders are now offering at least one variable home loan rate under 5.75 per cent. So, it pays to shop around!
Should you wait for the RBA’s next move?
With the RBA expected to cut rates—possibly as soon as 20 May—some experts suggest holding off on locking in a new loan just yet.
If the cash rate drops by 25 or even 50 basis points, as some predict, we could see variable rates fall below 5.50 per cent in the coming weeks.
But if you’re feeling the pinch from high repayments, it’s worth talking to your lender now. Even if you’re not eligible for the new CBA rate, you might be able to negotiate a better deal or consider refinancing with another provider.
What about existing CBA customers?
If you already have a mortgage with CBA, you won’t automatically get the new rate. However, you can use this as a bargaining chip.
Call your bank and ask if they can match the new offer or at least give you a discount. Banks are often willing to negotiate to keep your business, especially in a competitive market.
New options for borrowers
CBA has also launched a new ‘Simple Home Loan’ with up to two offset accounts, available to customers who apply directly.
The bank plans to extend this option to third-party brokers soon, but for now, brokers can’t access the lowest ‘Digi Home Loan’ rate.
Tips for making the most of the mortgage war
- Review your current rate: Check your latest statement and compare your rate to what’s on offer.
- Negotiate: Don’t be afraid to call your lender and ask for a better deal.
- Consider refinancing: If your bank won’t budge, it might be time to look elsewhere.
- Factor in fees: Always check for application, ongoing, or exit fees before switching.
- Think about features: Offset accounts and redraw facilities can help you save more in the long run.
The bottom line
The mortgage market is more competitive than ever, and that’s good news for borrowers, especially if you’re willing to do a little homework. Whether you’re a new buyer, a seasoned homeowner, or someone looking to downsize, now is a great time to review your home loan and see if you could be saving more.
Have you recently negotiated a better home loan rate or switched lenders? What was your experience? Share your tips and stories in the comments below—your advice could help others in our community save thousands!
Also read: New 10-year home loan sparks debate—experts split on risks and rewards
