Commonwealth Bank announces rate changes to new standard variable rate home loans
A major Australian bank has locked in fresh rate increases, days after warnings the country is one of the most at-risk globally to face widespread mortgage defaults.
Commonwealth Bank has locked in fresh rate increases for customers with standard variable home loans.
The move, announced on Friday, brings CBA’s standard variable interest rate for owner-occupiers with loan to value ratios of 60 per cent and less paying principal and interest to 5.44 per cent - a ten per cent per annum change.
CBA also announced changes to their three-year fixed rate home loan, with and without a mortgage advantage package, bringing the interest rate down 0.4 per cent to a new rate of 5.59 per cent per annum for owner-occupier home loans paying principal and interest rates.
“From today, Friday 14 April, we have announced changes to the product discount margins (within MAV Package) on our Standard Variable Rate home loan for new borrowings,” the CBA said in a statement on Friday.
The news comes as the International Monetary Fund announced in its World Economic Outlook that Australia faced the second-highest risk in the developed world, behind only Canada, of defaulting on their home loans.
The IMF credited Australia’s soaring house prices, high rates of household debt and increasing variable mortgage rates.
Nearly 900,000 Australians are expected to be impacted by a so-called “mortgage cliff” in the coming months, when cheap home loans taken advantage of during the pandemic revert to variable rates.
The Reserve Bank decided this month to pause its aggressive rate hikes with the official cash rate sitting at 3.6 per cent, however many predict rates to rise again in the near future.
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