Commonwealth Bank lifts home loan interest rates
11 July 2008
The Commonwealth Bank today announced that as a result of the continued increasing cost of funds that it is experiencing that it was increasing its variable home loan interest rates by 0.14% pa. This means that the Bank’s standard variable rate home loan will increase from 9.44% pa to 9.58% pa and its basic variable home loan from 8.93% pa to 9.07% pa. The new rates will be effective from Monday 14 July 2008 for new and existing customers.
Variable interest rates on some business loans will also increase by 0.15% pa, effective 14 July 2008.
Ross McEwan, Group Executive Retail Banking Services indicated that funding costs remain very high, with the cost of funding more than 1% (100bp), excluding any increases by the Reserve Bank, above the levels that were being experienced pre August 2007.
Mr McEwan said, "The Bank continues to balance the needs of its shareholders and customers by not passing on the full impact of the increased funding costs to borrowers and as a result has seen the margins on its home loan business decline significantly in the last year".
"The majority of Commonwealth Bank variable rate home loan borrowers have a buffer as they are already paying more than the required amount. Notwithstanding this, customers are encouraged to review their financial position and budgeting in light of this interest rate increase to ensure that their arrangements remain appropriate for their circumstances. Those customers who are seeking some assistance or financial advice should contact their branch or our home loan hotline on 13 22 24. We can discuss with them alternative arrangements, such as extending the loan term or perhaps switching to a fixed interest rate," Mr McEwan added.
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