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CBA raises mortgage rates by 0.3 percent for Unloan – out of step with RBA


The Commonwealth Bank has lured homeowners onto its digital Unloan mortgage with a rate hike of 0.3 percent – ​​higher than the amount the Reserve Bank of Australia raised in February.

The RBA raised interest rates by 0.25 percent at its February meeting, bringing the rate to 3.35 percent.

It comes as both CBA and NAB announced this week that their fixed home loan interest rates would be increased by as much as 0.4 percent for new customers.

Unloan’s excessive 0.3 percent increase would affect both existing and new customers.

Despite causing more pain for homeowners, rate hikes seem to continue. This will have a knock-on effect, with analysts warning that the profitability of the bank’s home loans is under pressure from fierce competition as people look to refinance and the number of new home loans declines.

Unloan still offers one of the most competitive rates at 4.74 percent and has also passed on 0.4 percent less in increases since rates began to rise in May last year.

However, banks are increasingly rewarding less risky prospects with better rates, as Westpac’s lowest variable rate loan of 4.89 percent is only available to new customers with a down payment of 30 percent or more.

Meanwhile, many Aussies are also facing the prospect of becoming “mortgage prisoners” with a chilling warning that some could be “forced to sell their homes” after a regulator declined to comment on a key issue affecting interest rate decisions from the bank.

Meanwhile, CBA has the largest home loan market share at 23 percent, but the stock fell from a record $111.15 on Feb. 3 to $99.28 on Wednesday.

Rising interest rates helped the Commonwealth Bank report a record $5.15 billion profit in the first half, but analysts warned there would be “headwinds”.

Russel Chesler, head of investment and capital markets at VanEck, warned “storm clouds are gathering over the banks” when they first announced their mega-profits.

“CBA specifically addressed concerns about the looming fixed interest rate cliff, deposit rate and cyber security risks in their results announcement. All the good news is already priced in. We do not see net interest margins expanding further as interest rates continue to rise and most fixed interest rates disappear later this year,” he said.

“The bank is increasing its capital buffer, a sign of caution as the headwinds to the economy increase.”

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.