CBA hikes rates by 30 points, tells customers to switch

The major bank has followed its peers by today announcing rate increases across its interest-only home loans.

CBA today revealed that Standard Owner-Occupied Interest-Only home loans will increase 30 basis points to 5.77 per cent and Standard Investor Interest-Only will increase by the same amount to 6.24 per cent.

The bank has reduced Standard Owner-Occupied Principal and Interest loans by 3 basis points.

“Commonwealth Bank recognises the importance of ensuring borrowers can sustain a strong path to property ownership and will be reducing our owner-occupier standard variable rate for those repaying principal and interest,” the group said.

“We are supportive of the banking regulator’s moves to manage the level of growth and resiliency in the housing market. To meet our regulatory requirements, variable interest-only home loan rates for owner-occupiers and investors will increase by 30 basis points.”

CBA’s group executive of retail banking services, Matt Comyn, said: “Paying off your home is important for Australians. For owner-occupier customers repaying principal and interest, they can take advantage of the interest rate reduction to pay off their home loan faster. These changes also help us keep the right balance in our home loan portfolio, in line with what our regulators require.”

CBA encouraged customers who currently make interest-only payments to switch to principal and interest repayments: "Customers who currently make interest only payments are encouraged, where they are able, to switch to principal and interest repayments.

“Switching is easy and attracts no fees. Customers can make the change at no cost online, over the phone, or by speaking with a home lending specialist in branch,” the bank said.

“These interest-only changes are not in response to the bank levy that was announced as part of the federal budget in May.”

The new rates will be effective from 7 July 2017.

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