Commonwealth Bank to slash fixed rates

The Commonwealth Bank will slash fixed rates from tomorrow, cutting up to 0.4 per cent across all fixed terms.

It follows the bank's decision to follow the Reserve Bank of Australia's cash rate cut this month and slash variable mortgages by 0.25 percentage points.

As a result of these changes, Commonwealth Bank's new lowest fixed rate will be 5.49 per cent for three years, according to Canstar.

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The financial comparison website said ANZ still has the lowest one- and two-year fixed rates among the big four banks, while NAB has the lowest three-, four- and five-year fixed rates.

These fixed rates are for owner-occupiers paying principal and interest.

Prior to the Commonwealth Bank's announcement, five lenders had cut fixed rates since the RBA's decision on May 20.

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And 20 lenders had cut at least one fixed rate this month, Canstar found.

A total of four lenders – BOQ, Community First Bank, Police Bank and Queensland Country Bank – are now offering at least one rate under 5 per cent at 4.99 per cent. Bank Australia also has a green home loan at 4.94 per cent.

"Fixed rates have been falling fairly consistently this year and we expect this activity will continue as banks price in the increasing likelihood of further cash rate cuts," Canstar data insights director Sally Tindall said.

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"CBA's fixed rate cuts aren't groundbreaking, but rather a bid to inch closer to its key competitors."

Tindall said big and smaller banks were expected to continue cutting fixed rates in the next few months.

"The majors might have to offer a fixed rate in the (four per cent range) if they're serious about getting people to lock in their rate," she said.

She said some borrowers had "relished the calm" of a fixed rate and might look to lock in now, while others will wait for further tax cuts to bring lower rates.

"If you're deciding between a fixed or variable rate, understand what might suit your finances and to some extent, your personality," Tindall said.

"When you make a decision, take the time to look for a competitive rate."

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