Australia: CBA cuts fixed mortgage rates

Despite a growing pressure to raise rates across the financial services, CBA is cutting lending rates by 10 basis points on several interest products for home buyers and investors. CBA has decreased interest loans for new and existing customers to 3.79% and 3.89% respectively and has cut its 3-year fixed investment home loan to 4.10%.

CBA’s recent decrease in lending rates neatly reflects data obtained from RFi Group which reveals that 22% of respondents chose their lender for their recent loan because they were offering the most competitive interest rates. That 1 in 5 respondents are likely to take a loan based on the amount of interest they pay, insinuates CBA may experience a greater number of new borrowers by lowering fixed mortgage rates.

Furthermore, in offering an insight into CBA’s mortgage cuts, a spokesman from the bank claimed that the changes reflect the Big 4 Bank’s commitment to presenting “a competitive suite of home loan products” and resonates with their strategy to maintain existing borrowers.

Indeed, RFi Group data reveals 26% of respondents selected their lender because it is their Main Financial Institution (MFI) for their personal banking. This data suggests it is likely borrowers will look towards their MFI for their lending needs and as a result, retain their existing relationship with them.

When it comes to CBA’s cuts to fixed mortgage rates, therefore, there is the reason to believe such changes will attract a higher number of borrowers.

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