CBA and ING cut variable rates ahead of RBA’s announced decision



06:40, 29 Sep 2020

5 minutes to read

Lenders have cut variable mortgage rates for homeowners and investors, amid speculation about a drop in the Reserve Bank’s cash rate.

The Commonwealth Bank of Australia (CBA) and ING have announced variable mortgage rate cuts of up to 15 basis points.

The CBA has cut the P&I rates on its Extra Home Loan product by 10 basis points for homeowners and 15 basis points for investors, effective September 25.

The big bank’s homeowner rates now start at 2.69 percent (benchmark 2.70 percent), while its investor rates now start at 3.12 percent (3.13 percent ).

At the same time, ING cut owner-occupied P&I rates on its Mortgage Simplifier and Orange Advantage products by 10 basis points, also effective September 25.

The changes made by ING apply to real estate loans with a loan-to-value ratio of up to 90% and loan amounts greater than $ 150,000.

Non-majors rates now start at 2.45 percent (comparison rate of 2.48 percent).

These rate changes come amid rising expectations of a cut in the Reserve Bank of Australia’s (RBA) spot rate.

Last week, Westpac chief economist Bill Evans and NAB Group Economics revised their expectations for monetary policy, revealing that they now expect the central bank to announce further key rate cuts. In the coming months.

This came in response to remarks by RBA Vice Governor Guy Debelle, who acknowledged that further cuts in the cash rate were “possible” as a way to accelerate the economic recovery from the COVID-19 crisis.

Mr Debelle’s remarks were seen by Mr Evans as a “clear sign” that the central bank is preparing to adjust its monetary policy parameters in a bid to complement the fiscal stimulus announced in the federal government’s budget.

According to Evans, the RBA is expected to reduce the overnight rate from 25bp to 10bp while also adopting a three-year bond target of 10np and adjusting the rate on new drawdowns of the term finance facility. at 10bp.

The Westpac economist said the central bank’s policy adjustments will be part of a coordinated effort between the central bank and the federal and state governments, which are expected to release their budgets in the coming months.

As such, Evans expects the RBA to announce the changes on October 6, the same day as the federal government’s budget announcement.

However, NAB Group Economics noted that the RBA may delay any changes until November, to ensure it “gets its messages out to a wider audience” without being distracted by the government’s budget announcement.

NAB economists also pointed out that even if further cuts in the cash rate were expected, the RBA would refrain from using negative interest rates, with the central bank previously saying such a move would be “extraordinarily unlikely. “.

[Related: Non-major lender cuts LMI to $0]

CBA and ING cut variable rates ahead of RBA’s announced decision

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Last updated: September 28, 2020

Posted: September 29, 2020

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