New cuts deepen the divide with major rivals
Commonwealth Bank of Australia (CBA) has reduced its investor variable mortgage rates for the third time in five weeks, stepping up efforts to retain its position as the country’s leading provider of investor loans.
The changes apply to CBA’s digital-only product, the Digi Home Loan, and are exclusive to new customers. The lowest rate for principal and interest investor loans is now 5.69%, while interest-only loans have dropped to 5.95%. These 0.09% reductions follow previous cuts on May 7 and May 30.
To qualify, borrowers must have a minimum 40% deposit, with higher rates applying for lower deposit tiers. The online-only nature of the loan is part of CBA’s broader push into streamlined digital lending.
The cuts come amid wider moves across the mortgage market, with more than a dozen lenders lowering investor rates by more than the 0.25 percentage point reduction made by the Reserve Bank of Australia (RBA) last month. Suncorp Bank, Newcastle Permanent, and Beyond Bank are among those adjusting investor rates beyond the cash rate shift.
According to Canstar data, over 30 lenders now offer at least one investor variable rate below 5.75%, with the lowest sitting at 5.49% (offered by Northern Inland Credit Union). The current average investor rate is around 6.06%, while new borrowers are seeing slightly better deals at around 5.96%.
CBA’s investor rate moves have further widened the gap between its offerings and those of the other major banks:
- CBA: 5.69% (P&I), 5.95% (IO)
- Westpac: 5.84% (P&I), 6.09% (IO)
- ANZ: 5.89% (P&I), 6.54% (IO)
- NAB: 6.46% (P&I), 6.79% (IO)
While NAB remains the only one of the big four not offering investor rates below 6%, its digital lender ubank currently lists a rate of 5.74% for new investor customers.
Data from the Australian Prudential Regulation Authority (APRA) also highlights CBA’s dominance, showing it held 27% of all investor mortgages as of April, which is well ahead of Westpac’s 22%. In dollar terms, that’s $199 billion worth of investor loans on CBA’s books.
Meanwhile, the longstanding interest rate premium paid by investors over owner-occupiers is narrowing. Since late 2022, the difference has fallen from a peak of 0.37 percentage points to just 0.22 percentage points, according to Reserve Bank data.
Canstar research director Sally Tindall said the latest rate cut signals CBA’s intent to tighten its hold on the investor mortgage market, describing it as “a clear message to investors that the door is wide open for their business.” Although the move benefits new borrowers, she noted it may leave existing CBA customers frustrated as they continue to pay higher rates.
Tindal also added that rival banks could follow, particularly Westpac, which is currently only 15 basis points behind. However, she cautioned that lenders won’t be lowering rates across the board.
“Banks aren’t likely to be rolling out the red carpet to every borrower. They’re going to want quality investments, ideally where the rental return is still strong and the owner has a good track record of paying their loan on time. For investors with a decent deposit and reliable rental income, it’s a good time to look for a sharper deal,” Tindall said.
