ABC cuts its flagship interest rate by 40 points

The CBA took one of the biggest moves in months, cutting its base variable rate by 40 basis points. It is believed to be the lowest base variable rate the bank has ever offered.

Australia’s largest mortgage lender will now offer clients with a loan-to-value ratio of less than 70% an interest rate of 2.29%.

The 70-80% LVR band rate was also lowered, with 30 points for a new mortgage rate of 2.39%

Higher LVRs benefit from a 14 point rate cut, lowering their mortgage rate with a CBA of less than 3% to 2.99%.

This move will surely send shock waves through the industry, as CBA rate cuts tend to be the trigger for larger rate cuts from other lenders.

READ MORE: Changes to APRA loans explained

It wasn’t all of the ABC’s cuts, however. They put 10 points on their fixed rates, with the 2, 3 and 4 year rates all going up.

The only fixed rate to be lowered was their 1 year, which fell below the symbolic 2% mark to 1.99%.

Analysts are already suggesting changes in CBA home loan rates are due to changes in APRA lending regulations

While cash rates have stayed the same for months, APRA tries to limit subprime loans by increasing the cushion rate against which clients are assessed when applying for loans.

With the ABC’s interest rate call today, they are staking their claim with their large deposit customers, who can refinance at this current home loan rate.

ING also made the same move, with a 25 point drop in its variable rate from 2.49% to 2.24% for owner-occupiers, while the fixed years have all increased.

An ABC spokesperson said, “We regularly review and monitor our products. Our competitive mortgage rates remain at historically low levels and continue to provide value to clients, including our fixed rate of 1.99% pa for 1 year (owner-occupiers paying principal and interest in the Wealth Package ).

“Our customers have access to cutting-edge features including Home Loan Compassionate Care, CommBank Green Loan and Home-In, as well as recently announced partnerships with energy retailer Amber, Property Management Platform: Different, Supplier nbn More and the fintech startup CoGo. ”

“As part of our review, we are amending some global fixed rates, taking into account the high underlying financing costs and the broader economic recovery. We are also updating the discount for new eligible customers on our Extra home loan products. “

“We encourage clients to speak with their lender or CommBank broker to see how we can get them to their homes faster. “

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