Friday, June 14, 2024

Commonwealth Bank’s major move for mortgage holders

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Commonwealth Bank (CBA) has launched a new home loan product for mortgage holders. The digital-only loan offers the lowest rate from the major bank, but it comes with some trade-offs.

The new ‘Digi Home Loan’ is only available to customers who are refinancing their mortgage from another bank or financial institution. Mortgage holders will also need to sidestep the branch and brokers, with the home loan available online only.

It comes with an interest rate as low as 6.15 per cent. However, that’s for owner-occupiers with a 40 per cent deposit, paying principal and interest. Higher interest rates apply to investors and those with smaller deposits.

Commonwealth Bank (CBA) sign

CBA has launched a new home loan offering a lower interest rate and cashback perks for customers. (Source: AAP)

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This pips CBA’s former lowest advertised rate of 6.49 per cent, which is available on the bank’s standard variable loan with wealth package. But, RateCity found it’s still not the lowest rate on the market.

“With a rate of 6.15 per cent, CBA’s new Digi Home Loan is in the lowest 12 per cent of all owner-occupier, principal and interest variable rates on the database, however, there are still over 60 different lenders offering at least one lower variable rate,” RateCity research director Sally Tindall said.

That includes offers from ANZ Plus and Macquarie Bank, both at 6.14 per cent, and Bendigo Bank at 6.01 per cent. CBA’s online-only subsidiary Unloan also offers a lower rate at 5.99 per cent.


“The bank wants to be something to everyone, yet with no access to the broker network, some customers may decide to opt for challenger banks such as Macquarie for the extra support, or Bendigo for lower interest rates,” Tindall said.

Customers can make unlimited additional repayments to their home loan and also have the ability to redraw funds. There is no offset account.

Instead of an upfront $2,000 cashback for refinancers – which the bank scrapped last year – CBA will offer ongoing cashback perks.

It will refund the $10 monthly loan service fee charged to customers via its Yello platform. Plus, after 12 months, customers can get cashback each month based on their loan amount and the number of years they’ve had it.

As a digital home loan, customers will be encouraged to self-serve. If they hit a wall, they can still access support via the phone or in-branch, but CBA notes it may charge for using these services from mid-2025.

The bad news is the new home loan is not available to existing home loan customers. But there could still be a way to nab a better rate.

“Existing CBA customers may be miffed that this new digital home loan is ‘off limits’ to them, however, they should realise it’s the perfect launching pad to talk to the bank about getting a better rate for themselves without having to go digital,” Tindall said.

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