CBA cuts fixed home loan interest rates, ups term deposits

CBA was the first of the big four banks to update the market on its home loan rates following the RBA’s decision.

CBA was the first of the big four banks to update the market on its home loan rates following the RBA’s decision.

CBA has slashed rates on its fixed home loans after the Reserve Bank trimmed the official cash rate to a record low of 0.25 per cent, but customers on variable rates will see no change after the bank failed to pass on any of the cut to its variable-rate mortgages.

Shortly after the RBA announced the cash-rate cut, CBA on Twitter said it would reduce its one-, two- and three-year fixed rate home loans by 70 basis points to 2.29 per cent.

“These are unprecedented times, and they call for unprecedented measures,” CBA CEO Matt Comyn said.

Commonwealth Bank CEO Matt Comyn. Picture: Nikki Short

The bank has also launched a new term deposit rate of 1.70 per cent, up 60 basis points, it said.

CBA was the first of the big four banks to update the market on its home loan rates following the RBA’s decision.

The RBA rate cut was widely expected by the market and follows the central bank trimming its cash rate by 25 basis points to 0.5 per cent on March 3. The major lenders passed that rate cut on in full.

It was the first time since 1997 that the RBA has moved the cash rate outside of its monthly schedule.

“The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band,” the RBA said in a statement on Thursday.

As well as lowering the cash rate to 0.25 per cent, the central bank will from tomorrow launch a bond-buying program with the aim of targeting a 0.25 per cent yield on three-year Australian government bonds. RBA governor Philip Lowe is due to provide further details in a speech at 4pm on Thursday.