CBA cuts rates for new borrowers, rekindling mortgage war fears By Reuters

By Rishav Chatterjee

(Reuters) – Commonwealth Bank of Australia ( OTC: ), the country’s biggest lender, cut interest rates on some of its home loan products for new customers on Friday, sparking fears it will fuel intense competition in the local credit market mortgage.

CBA shares, which had fallen as much as 0.5 percent earlier in the day, reversed losses to end 0.3 percent higher.

CBA said in a statement that it has cut the variable mortgage rate for new borrowers with a 20% deposit by 25 basis points to 6.89%, while those with larger deposits will see a reduction of 20 of basic points, with immediate effect.

“Perhaps the move to cut rates on the lending side is a way of trying to show some balance from the banks’ point of view,” said Tim Waterer, market analyst at KCM Trade.

Since the start of the year, Australian banks have been in a race to sell mortgages and deposits that have squeezed margins.

Intense competition in the market, however, eased as CBA became the first major bank to cut mortgage discounts following its first-half February result.

The interest rate cuts come even as Federal Treasurer Jim Chalmers and Labor MP Jerome Laxale have expressed their desire to refer banks to the country’s competition watchdog to investigate the interest rates banks are offering savers amid interest rates at a decade high and inflation above the central level. the bank’s target range.

Earlier this week, CBA also cut its term deposit rates, along with other rivals, the Australian Financial Review reported.

ANZ cut deposit rates by 80 basis points, while CBA cut by up to 50 basis points, according to the report.

Reserve Bank of Australia (RBA) Governor Michelle Bullock recently played down any optimism about a rate cut before Christmas. Markets expect cuts later this year or early next year once inflation returns to target.