Tight competition between the big four banks has seen the National Australia Bank (NAB) cut its variable home loan interest rate by 0.1 per cent to 2.19 per cent, although the change is only for new owner-occupiers.
NAB’s lowest rate is now in line with the other big four banks, however, it requires a 20 per cent deposit, which is less than Westpac and ANZ who require at least 30 per cent.
While the variable rate has seen a reduction, NAB has increased its fixed rates by up to 0.5 per cent for owner-occupiers and investors.
The fixed rate on a five-year term is up 0.5 per cent to 4.19 per cent, which equates to new borrowers paying $144 more per month on a $500,000, 30-year mortgage.
This is the sixth time NAB has hiked fixed rates in six months, and the second time this year.
RateCity.com.au research director, Sally Tindall said NAB is following the lead of the other major banks.
“While fixed rates are rising rapidly, there is still plenty of competition in the variable home loan market,” Ms Tindall said.
“NAB has bowed to the pressure and cut its basic variable rate to match its big bank competitors Westpac and ANZ.”
“Despite no change from the RBA (Reserve Bank of Australia), we’ve seen the average big four bank basic variable rate drop by 0.35 per cent in the last year, but only for new customers.
“For anyone on a variable rate, now is the time to haggle with your lender before the predicted RBA rate hikes begin.”
After a surge in interest rates on fixed rate products, the latest data from the Australian Bureau of Statistics shows new borrowers are returning to variable loans, with 66 per cent of new loans settled in January on a variable rate.
Ms Tindall said the higher interest costs with current fixed rate loans are seeing customers moving back towards variable loans.
“With the majority of fixed rates from the big four now starting with a ‘3’ or higher, it’s no surprise to see borrowers opt for lower variable rates,” she said.
