If you're worried about interest rates going up again, you're not alone. We've all been there, watching on as our mortgage statements gradually creep up... and up... and up.

It's no fun, especially when you consider how much of your hard-earned money is going towards paying off your home loan each month (if you still have an ongoing loan).

The thought of those numbers increasing, even more, can be enough to make anyone break out into a cold sweat. But don't worry – we've got good news for you!

The Commonwealth Bank is currently offering a hefty discount on mortgages despite predictions of further rate hikes. However, there is a catch – the offer is only available to new borrowers paying off principal and interest with a Wealth Package loan, provided they have a hefty 40 per cent home loan deposit.

On Monday, borrowers with the preferred loan type were offered a mortgage rate of just 4.57 per cent – a sizable 2.03 percentage point drop from the previously advertised offset rate of 6.6 per cent but for this privilege, owner-occupier borrowers have to pay an annual $395 fee.

Despite forecasts for further interest rate increases, Australia's largest home lender, the Commonwealth Bank, is providing a huge discount on mortgages. Credit: Shutterstock.

And for borrowers who only have a 20 per cent home loan deposit (the standard requirement for banks), Commonwealth Bank is offering a mortgage rate of 4.79 per cent. It should be noted, however, that it's still lower than the more common 4.81 per cent advertised rate by the Commonwealth Bank for borrowers with a 20 per cent deposit with no offset account.

Sally Tindall, Research Director at RateCity, said that the most recent drop in Commonwealth Bank mortgage rates could incite a price war among other banks as they try to attract the safest, least risky borrowers.

She said: 'For years, the big banks have been offering up special discounts to select customers that others can't see.'

'This move from CBA is hopefully a step closer to the end of this cloak of secrecy. These discounts will help Australia's biggest bank shore up its loan book with rock-solid borrowers who are well-placed to be able to withstand the pressures that come with rising rates.'

As of Monday, ANZ offered borrowers a 5.74 per cent mortgage offset rate for a 20 per cent deposit, with a $120 yearly fee.

Meanwhile, Westpac offered borrowers with a 30 per cent mortgage deposit a 5.94 per cent mortgage rate.

NAB offered borrowers with a $750,000-plus loan (or equivalent) a 6.37 per cent mortgage rate with an annual $395 fee.

It should be noted that the advertised home loan rate doesn't reflect the actual cost a borrower would face. Here’s a comprehensive guide to navigating and understanding your home loan statement to know exactly how much you’re paying for your loan.

Key Takeaways

• The Commonwealth Bank is offering a promotional interest rate of 4.57 per cent for new borrowers with a 40 per cent deposit. This is a 2.03 percentage point drop from the bank's previous offset rate of 6.6 per cent.
• Other big banks are likely to follow suit and offer similar discounts to attract safe bet borrowers.
• Borrowers with all kinds of variable rates are in for more pain with economists expecting more interest rate rises from the Reserve Bank of Australia, with annual inflation in the September quarter at a 32-year high of 7.3 per cent.

So, what does this mean for you?

If you want a discounted home loan and are eligible for a 40 per cent deposit (which, we have to say, is quite a hefty amount), it might be worth giving the Commonwealth Bank a call and seeing if you qualify for the cheaper rate.

If not, you might want to consider refinancing your mortgage, provided the banks are willing to help after the Reserve Bank’s current clampdown on unduly risky lending behaviour.

What do you think about this? Do you think borrowing the bigger deposit will be a better option? Share your thoughts with us in the comments below!

 

[Ricci]

Why is there an annual fee? I can understand a set-up fee as someone has to put all your details on the computer but after that it's all automatic isn't it? Why should anyone have to pay a fee for the privilege of paying inordinate amounts of interest? These Banks have got people over a barrel and they know it, it makes me soo mad!

 

[AveriDennis]

Hey everyone! Just came across this post and it hit close to home. I can totally relate to the feeling of dread as the mortgage statements seem to only climb. Didn't think I'd ever see the day with a huge discount on mortgages by Commonwealth Bank, but here we are! This is honestly a breath of fresh air amidst all those interest rate hikes. If you're like me, trying to navigate these loans without getting even more overwhelmed, I'd suggest looking into it. It might be a game-changer of a deal. Funny enough, just last week I stumbled upon a Mortgage Broker in Ipswich while looking for more information on this whole deal. Sometimes it's worth exploring local connections to get a clearer picture of the discounts out there. Trust me, it can make a world of difference. Good luck, folks!