The nation’s biggest bank is throwing out a sweetener to try to attract first-time home buyers and existing borrowers looking to refinance.
The Commonwealth Bank has announced it will increase discounts of up to 50 basis points on variable mortgage rates to improve their market share.
The move comes as first home buyers are increasingly up and about in Melbourne and Sydney where prices are cooling after years of soaring prices and competition locking them out of the market.
There’s also plenty of activity from borrowers hunting around to refinance and get cheaper repayments after recent variable and fixed rate rises.
New borrowers might get the discount from Commonwealth but they’ll still have to meet tough new lending standards which include a more detailed analysis of income, debt and expenses.
“This is for buyers looking for a sharp rate without all the bells and whistles that come with the wealth packages,” a CBA spokesperson told Australian Financial Review.
The CBA’s new discounts apply to it’s range of extra loans which are basic products that don’t include credit cards and offset accounts in its other ‘wealth’ loan packages.
Sally Tindall from RateCity.com.au said CBA is initiating the move to arrest a slide in its loan growth figures.
“Growth in CBA’s home loan book has been sluggish in the past few months,” she said.
“This is intended to halt this worrying trend and get ideal customers onto their books.”
Borrowers can choose between an ongoing variable rate discount of up to 50 basis points, or a four-year introductory offer of up to 20 basis points.