Australia's CBA cuts rates on fixed rate home loans, variable rate loans unchanged

Nov 4 (Reuters) - Australia’s biggest lender Commonwealth Bank of Australia on Wednesday said it will reduce interest on fixed rate home loans after the central bank trimmed interest rates to near zero in a bid to prop up a sagging economy.

The lender, however, did not pass on the rate cut to variable rate mortgages which accounts for about 80% of its loan book.

The Reserve Bank of Australia cut interest rates on Tuesday to support job creation and tackle a high rate of unemployment after the coronavirus outbreak forced businesses to down shutters, leaving hundreds of thousands without work.

In a statement, CBA said the interest on new four-year fixed rate home loans for owners occupying the property would be reduced 100 basis points, while one-, two- and three-year plans would get a much smaller reduction of 10-15 basis points.

Rates for unsecured business loans through the government’s small and medium enterprises loan guarantee scheme and some fully secured business loans would also drop, the lender said. (Reporting by Rashmi Ashok in Bengaluru; Editing by Sam Holmes)