NAB has raised its basic variable rate by 0.1% for owner-occupiers and investors with an LVR of up to 80%.
It was the second variable home loan rate rise from NAB in less than a fortnight and marks the fourth time the bank has increased variable rates out of cycle with the Reserve Bank’s cash rate decisions, according to Canstar’s tracking of recent rate moves.
The rate change from NAB will see principal-and-interest owner-occupied rates increase to 5.99% and investment rates lift to 6.34%. Interest-only rates for investors will also rise by 0.1%.
Canstar’s tracking revealed that the big four banks have made several out-of-cycle variable-rate moves, both increases and decreases, since RBA’s latest rate rising cycle began in May 2022.
Since May 2022, NAB has made out-of-cycle increases totalling 0.25% for its owner-occupied basic variable 80% LVR rate, in addition to passing on the RBA’s 3.75% cash rate hikes. The bank also cut the same loan by 0.2% in August 2022.
“NAB’s second variable home loan rate increase in a fortnight will further disturb borrowers already shell-shocked after a year of rate hikes,” said Steve Mickenbecker (pictured above), Canstar’s finance expert. “The Reserve Bank cash rate rise in May had already added $79 to the monthly repayment on a $500,000 basic variable loan at NAB, and the 0.1% rise tops this up to $112.
“Bank margins are coming under pressure as depositors are finally starting to receive the full benefit of Reserve Bank cash rate increases, and other funding costs have already risen to more normal levels after the years of COVID support.
“Though the latest NAB variable rate increase is modest, it continues the process of margin repair and the other major banks are on the same bandwagon.
“Out-of-cycle increases by the big banks will ease the pressure on smaller lenders that are without large deposit bases, potentially allowing them to reprice their home loans to cover their higher cost of funding.”
Mickenbecker said the lowest variable interest rate on Canstar’s database is 4.94%, which is 1.38% below the average variable rate, saving refinancers $436 per month on a $500,000 home loan.
“This can cover a big chunk of the $1,133 already added to average monthly home loan repayments in the last 12 months,” he said.
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