Competitive CBA cuts five year rate to record low as inflation quickens

Competitive CBA cuts five year rate to record low as inflation quickens
Competitive CBA cuts five year rate to record low as inflation quickens

The Commonwealth Bank has cut its five-year fixed mortgage rate to a record 4.99% low, an adjustment of 70 basis points from July 23.

It is the first time the big bank has cut its five-year fixed rate below 5%. Within hours Westpac and NAB followed by matching the CBA's five-year rate.

The NAB also cut rates on its three and four-year loans.

Meanwhile Australia’s headline inflation rate was up 0.5% in the June quarter.

There was an annual gain of 3%, according to the Australian Bureau of Statistics.

The ABS’s measure of core inflation sits near the top of the Reserve Bank of Australia’s target range of 2% to 3%.

Michael Blythe, chief economist at Commonwealth Bank of Australia, said the figures were a touch above market expectations and "are a reminder that not all inflation risks are to the downside".

"The QI underlying figures were revised a touch higher as well. Nevertheless, the message from the RBA is that they want a long period of stability in rates," he advised.

"In our view, the RBA can stay on hold till QI 2015."

Savanth Sebastian, economist at CommSec said at present inflation is not a threat to the economy, meaning that the Reserve Bank can comfortably keep interest rates at exceptionally low levels over the medium term.

"Domestic inflationary pressures remain well contained and given the slow growth in wages it is unlikely to result in a change to the domestic inflation landscape." 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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