CBA and ING join mortgage rate cut rush

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Two of Australia’s largest lenders, Commonwealth Bank and ING, have joined the growing list of lenders which have recently reduced variable home loan rates after announcing cuts last Friday.

The Commonwealth Bank made a number of rate changes, but the major move was to the variable rate available on its Extra Home Loan which the bank reduced by 74 basis points to a new low of 2.39% p.a. (2.40% p.a. comparison rate*) for owner occupiers (70-80% LVR).

“It’s a big play by the Commonwealth Bank to drop a rate down towards the pointy end of the market, although the fact that they’re targeting relatively low risk borrowers suggests that they’re being quite cautious,” says Mozo Banking Expert, Peter Marshall.

“Yes there are better rates out there, but for people who want to go with a big bank, it’s pretty sharp. The Extra Home Loan doesn't have an offset account though, so if you’re after a full-feature loan, it won’t be for you.”

The Extra Home Loan rate is now the lowest comparable ongoing variable rate on offer from one of the big four, though it’s worth noting that Westpac’s Flexi First Option Home Loan currently comes with a 24-month introductory rate of 2.09% before reverting to 2.59% p.a. (2.52% p.a. comparison rate*). 

Big four lowest variable rates (owner occupied, <80% LVR) - October 18, 2021

LoanVariable rate
CBAExtra Home Loan2.39% p.a. (2.40% p.a. comparison rate*)
WestpacFlexi First Option Home Loan (2 Year Intro Rate)2.59% p.a. (2.52% p.a. comparison rate*)
NABBase Variable Rate Home Loan2.69% p.a. (2.69% p.a. comparison rate*)
ANZSimplicity PLUS2.72% p.a. (2.76% p.a. comparison rate*)

Meanwhile ING, which is one of the largest mortgage lenders outside of the big four, cut its Mortgage Simplifier and Orange Advantage (Package) rates by 25 basis points each.

That means the lowest variable rates available for owner occupiers (<80% LVR) are now 2.24% p.a. (2.27% p.a. comparison rate*) with the Mortgage Simplifier and 2.29% (2.64% p.a. comparison rate*) with the Orange Advantage (Package).

CBA and ING aren’t alone in having recently reduced variable rates though, as the likes of Bank Australia, Bendigo Bank and UBank have all made reductions to their respective home loan rates since October 1.

How low can variable rates go?

Of course, this isn’t a new trend - home loan rates have been on a downhill trajectory for a few years now. Since October 2018, the average variable rate in the Mozo database for an owner occupier (80% LVR, principal and interest repayments) has fallen from 4.35% to 3.14%.

And that’s just the average. Right now there are 32 lenders, including many larger banks, in the Mozo database offering at least one home loan (owner occupied, 80% LVR) with a headline variable rate under 2.30%.

Lowest variable rates Mozo database (owner occupied, <80% LVR) - October 18, 2021

LoanVariable rate
Reduce Home LoansSuper Saver1.88% p.a. (1.97% p.a. comparison rate*)
Tic:TocVariable Home Loan1.89% p.a. (1.90% p.a. comparison rate*)
Police Credit UnionBetter Home Loan1.89% p.a. (1.93% p.a. comparison rate*)
Pacific Mortgage GroupStandard Variable 1.94% p.a. (1.94% p.a. comparison rate*)
homeloans.com.auLow Rate Home Loan1.99% p.a. (1.99% p.a. comparison rate*)

The big question though is how long variable rates will continue to stay this low? According to Marshall, it’s unlikely that we’ll see dramatic changes any time soon.

“There are no signs yet that the Reserve Bank is going to bring forward the cash rate increase. The RBA seems confident that there aren’t going to be any inflationary issues, so that gives lenders a bit more confidence to continue to sharpen up their variable rates,” he says. 

“When you look at deposit accounts, which make up part of the cost of funding, banks continue to cut those rates. So as they erode the cost of deposits further and further, banks have more wiggle room to cut their mortgage rates - especially for groups of ‘safer’ borrowers such as prime owner-occupiers with lower LVRs.”    

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Looking to take out a new mortgage, or perhaps you’re looking to make the most of the low rates currently on offer to refinance your existing loan? Well if you’re looking to compare loans from a range of lenders all in the one place then there’s only one place to start: the Mozo home loan comparison hub.

Compare variable rate home loans - rates updated daily

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
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    Mozo Experts Choice 2021
    Smart Booster Home Loan

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    1.85% p.a.variable for 24 months and then 2.25% p.a.
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    New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.

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    UHomeLoan - Discount Offer

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    2.19% p.a.
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    Enjoy a super low rate. $0 fees to consider. Fast and easy online application. Free redraw and free extra repayments. Flexible payment terms. Min 20% deposit required.

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    Mozo Experts Choice 2021
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

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    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required. Winner of three Mozo Expert's Choice Awards for 2021.

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    Basic Home Loan

    Owner Occupier, LVR<60%, Principal & Interest

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    2.14% p.a.
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    Competitive low variable rate. No application or account management fees. Flexibility to split your loan and set different repayment types. Fee free withdrawals of your savings.

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    Variable Home Loan

    Owner Occupier, Principal & Interest

    variable rate
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    Initial monthly repayment
    1.99% p.a.
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    Refinance only. Super-fast digital application process. Zero upfront fees. No on-going service fees. Free 100% offset sub account. Minimum 25% deposit required.

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    Mozo Experts Choice 2021
    Variable Home Loan Special

    Owner Occupier, Principal & Interest, LVR <80%

    variable rate
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    Initial monthly repayment
    1.99% p.a.
    2.02% p.a.

    Yard’s low-rate variable special home loan is packed with all features – unlimited additional repayments, free redraw, 100% offset account. Enjoy a simple online application. Special rate applies to home loan applications submitted by 31st January 2022. Low Cost Home Loan winner in the Mozo's Experts Choice award 2021.

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    Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR <70%

    variable rate
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    1.97% p.a.
    1.98% p.a.

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Plus, $3,288 cashback offer (conditions apply).

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    Discounted Variable Home Loan

    Owner Occupier, Principal & Interest

    variable rate
    comparison rate
    Initial monthly repayment
    2.69% p.a.
    3.10% p.a.

    Enjoy a great low rate with no ongoing fees. Ability to split your loan between fixed and variable. 100% offset account. $2,000 cashback offer for investor & owner occupied home loans over $250k with LVR ≤80% when refinancing to Newcastle Permanent. Limited time offer extended, T&Cs apply.

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    Details

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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