The rate change – effective 30 May – will see CommBank pass on the full 25 basis point reduction to new and existing variable rate home loan customers.
The bank's lowest advertised rate is expected to fall to 5.59% p.a., down from the current 5.84% p.a. available on its Digi Home Loan.
That change would drop monthly repayments on a $600,000 mortgage by around $95 – from $3,535 to $3,440 – potentially saving borrowers more than $1,100 per year.
"Today’s decision will help to deliver some much-needed additional relief for many Australians with a mortgage," said CommBank retail banking services executive Angus Sullivan.
"When combined with the February rate cut this change should free up some more cash flow for homeowners who need it.
"We know many have had tighter budgets in recent months and will welcome that additional flexibility."
CommBank is the second major bank to announce its response to the RBA decision, with NAB already having promised to pass on the cut.
Both owner-occupiers and investors are set to benefit from the bank's lower rates, while fixed rate borrowers will miss out.
It comes after CommBank dropped rates on its Digi Home Loan line up earlier in May, lowering the most competitive from 5.90% p.a. to 5.84% p.a.
Importantly, homeowners with CommBank mortgages won't automatically realise lower repayments on the back of Tuesday's announcement.
Borrowers who wish to reduce their repayments must request to do so via the bank's website or Netbank.
Only 14% of eligible home loan holders adjusted their direct debit mortgage repayments following the RBA's February cut, new data from CommBank revealed this week.
“For those who did not reduce their direct debit repayments, they may now be making additional repayments on their mortgage, which could help them to pay off their loan faster,” CommBank home buying executive general manager Dr Michael Baumann said ahead of the RBA's Tuesday announcement.
“These additional payments will also increase the available balance of their loan accounts and customers may have the flexibility to redraw the available balance at any time, for example if they experience an unexpected cost.”
See how other lenders are responding to the RBA's May rate cut: Your Mortgage rolling coverage
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