The Commonwealth Bank of Australia (CBA) has announced it will reduce fixed home loan rates by up to 0.40 percentage points across all terms, effective from Friday.

The move coincides with a 0.25 percentage point cut in CBA’s variable rate, following the Reserve Bank of Australia’s (RBA) recent cash rate reduction.

CBA’s new lowest fixed rate will be 5.49% for a three-year term.

Despite the cut, experts suggest the reductions may not be enough to encourage borrowers to lock in fixed rates.

ANZ continues to offer the lowest one- and two-year fixed rates among the major banks, while NAB retains the lowest rates for three-, four-, and five-year terms.

Sally Tindall, data insights director at Canstar.com.au, noted that while CBA’s cuts bring them closer to competitors, they are unlikely to spark a surge in fixed rate demand.

Tindall added that with only a 0.10 percentage point gap between fixed and variable rates, many Australians may prefer to wait for further RBA rate cuts.

She also indicated that lenders may need to offer fixed rates below 5%—possibly in the “4’s”—to attract significant interest from borrowers.

Since the RBA’s recent rate cut, 20 lenders have lowered at least one of their fixed rates, with four lenders now offering rates as low as 4.99%.

Borrowers are advised to carefully assess whether a fixed or variable rate suits their financial situation and compare options before making a decision.