Commonwealth Bank’s new digital home loan, Unloan, will play a key role in persuading home loan borrowers who took out a fixed rate loan with CBA to stay with the bank when they roll over to a variable rate.
Like the other big banks, CBA used its Reserve Bank term funding facility loans, which have a three-year term, to offer cheap fixed-rate loans.
At the end of June 2020, 23 per cent of the bank’s home loan portfolio was fixed rate mortgages.
But in the half-year to December 2021, 47 per cent of new mortgage lending was at fixed rates.
The bank has disclosed that $19 billion of fixed rate home loans mature in the six months to June this year, $25 billion in the six months to December, $38 billion in the six months to June next year and $53 billion in the six months to December next year.
After that the maturities taper off but are still significant: $12 billion in the six months to June 2024, $25 billion in the six months to December 2024, $22 billion in the six months to June 2025 and $6 billion in the six months to December 2025.
Unloan was launched yesterday with an owner occupier variable rate of 2.14 per cent. The product includes a loyalty discount of 1 basis point every year, up to 30 years.
For investors, the variable rate is 2.44 per cent and the same loyalty discount applies.
These rates will not increase on May 20, when the bank’s previously announced variable rate increases take effect.
Comparison site Canstar says that for an owner occupier the Unloan rate compares with the current rate of 2.29 per cent for a CBA basic variable rate loan and 3.85 per cent for a CBA variable package rate.
Unloan is currently taking applications for refinance of home loans up to $3 million and up to 80 per cent of the property’s value.
The bank said it would start taking new home loan applications “in coming months”.