NAB, Australia’s third-largest bank, has reduced its fixed home loan rates by up to 0.65 percentage points, making its three-year fixed rate for owner-occupiers with a 30% deposit a competitive 5.89%.
|
Fixed term |
Old rate |
New rate |
Change % points |
|---|---|---|---|
|
1-year |
6.69% |
6.29% |
-0.40 |
|
2-year |
6.59% |
6.04% |
-0.55 |
|
3-year |
5.99% |
5.89% |
-0.10 |
|
4-year |
6.74% |
6.24% |
-0.50 |
|
5-year |
6.79% |
6.29% |
-0.50 |
Source: RateCity.com.au
This move places NAB’s rate in line with similar offerings from Commonwealth Bank (CBA) and Westpac, leaving ANZ as the only major lender with a three-year fixed rate still above 6%.
|
Big four banks: lowest advertised rates |
||||
|---|---|---|---|---|
|
Loan type |
Westpac |
NAB |
ANZ |
|
|
1-year |
6.39% |
6.09% |
6.29% |
6.69% |
|
2-year |
6.29% |
5.89% |
6.04% |
6.54% |
|
3-year |
5.89% |
5.89% |
5.89% |
6.59% |
|
4-year |
6.29% |
5.89% |
6.24% |
6.74% |
|
5-year |
6.69% |
5.89% |
6.29% |
6.84% |
|
Variable |
6.15%* |
6.44%, 2 yrs then +0.4% pts |
6.79% |
6.14%* |
Source: RateCity.com.au. Note: rates are for owner-occupiers paying principal and interest. Deposit requirements apply. *Rates are for CBA and ANZ’s digital-only home loans.
NAB’s three-year fixed rate reduction follows a similar move by Macquarie Bank, which recently cut its rates to 5.39%. Despite NAB’s latest reduction, it still lags behind the lowest rate in the market, which sits at 4.99%, offered by SWS Bank.
“This move brings NAB’s lowest three-year fixed rates in line with its major bank competitors, CBA and Westpac’s lowest three-year rates,” said Laine Gordon (pictured above left), RateCity’s money editor.
While NAB’s fixed rate is now more competitive, borrower interest in fixed rates remains low.
Only 2% of new and refinanced loans opted for a fixed rate in August, according to ABS figures. Many borrowers prefer to stay with variable rates, anticipating potential cash rate cuts from the RBA later this year.
“With the next move from the RBA almost certainly a cut, the prospect of fixing for this long is unlikely to appeal to many people,” Gordon said.
Although fixing a home loan can offer peace of mind, it’s not always the best choice.
Fixed rates often come with less flexibility, such as limited options for extra repayments and no access to an offset account.
Rachel Wastell (pictured above right), Mozo’s money expert, indicated that these rate cuts should be a “wake-up call” for homeowners to check if their current rates are higher than what’s being offered to new borrowers and to contact their lender for a possible rate match.
For clients uncertain about committing to a fixed rate, a split loan may be a practical solution. This approach enables a portion of the loan to be fixed, providing stability, while the remaining portion stays variable, allowing borrowers to take advantage of potential future rate cuts.
With many fixed rates dropping across the industry, now is an ideal time for brokers to assist clients in reassessing their mortgage options. Even a small reduction in interest rates can lead to substantial savings over the life of the loan, potentially saving clients hundreds or even thousands of dollars.
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