ABC increases variable rates by 0.25% and remains “mom” on savers

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Australia’s largest bank announced tonight that it will pass on the full cash rate hike to its variable rate mortgage customers, effective May 20, 2022.

CBA variable rates for homeowners paying principal and interest

Old tariff New tariff Increase in refunds, $500,000
standard-variable

4.55%

4.80%

$72

Updated variable

3.85%

4.10%

$69

Lowest variable

2.19%

2.44%

$62

Source: RateCity.com.au. Repayments are for a homeowner paying principal and interest with a $500,000 loan over 25 years. An LVR of 70% applies to the lowest CBA variable rate.

In a worrying sign, the bank has not indicated what it will pass on to its millions of savings customers, saying they are “under review”.

At this stage, Westpac, NAB and ANZ have not indicated how they will react to today’s historic cash rate hike.

RateCity.com.au research director Sally Tindall said: “The CBA is the first taxi out of the rankings, matching the RBA’s cash rate hike of 0.25 percentage points for variable borrowers. .”

“It’s only a matter of time before the other big banks follow suit, and it’s likely they’ll also raise rates by 0.25 percentage points,” she said.

“Many of the bank’s customers will be disappointed with these hikes, especially given that the CBA did not pass on the RBA’s last two cash rate cuts in 2020.

“What we don’t know is what the CBA plans to do for its savers and that’s a worrying sign. This could signal that the bank may not fully pass on this increase to its millions of savings customers.

“Over the past decade, savers have seen their interest rates plummet. The ABC should do the right thing and pass this increase on to these customers.

“Competition is still strong in the variable rate market, with Homestar Finance deciding today to keep its lowest rate for new customers of 1.79% unchanged. Reduce Home Loans also said it would keep at least a variable rate below 2%.

“It is possible that more lenders will decide to keep their new customer rates below 2%, to attract new business,” she said.

Find out who has moved on RateCity.com.au’s RBA rate tracker

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