In a surprising move, the National Australia Bank (NAB) recently announced significant changes to its home loan interest rates, leaving many in the housing market wondering about the implications of these adjustments.

These changes came into effect on Wednesday, September 13, 2023, and have sparked speculation about the bank’s motives and potential impact on the broader housing landscape.

What’s new? 

NAB’s announcement encompasses two critical areas of change: adjustments to their Base Variable Rate (BVR) home loan product and revisions to their fixed interest rates for the NAB Tailored Home Loan.

Changes to Base Variable Rate Home Loans include cuts of 0.96% to the Owner-Occupier Principal and Interest loan with the new rate now 6.49%. In comparison, the Owner-Occupier Interest Only was trimmed by 0.33% leaving the rate at 7.69%. Landlords also won a haircut with Principal and Interest loans slashed by 0.96% to 7.01%, while the Residential Investor Interest Only loan has landed at 8.02% after a 0.33% cut. In comparison the owner occupied advertised variable rates were also reduced to 7.32%, which after negotiated discounts, leaves borrowers with a rate of around 5.8% and investment principal and interest rates of 6.1% after negotiation.

There were also changes to Fixed Rates for NAB Tailored Home Loans aimed at making the fixed rates more competitive, potentially attracting borrowers who seek stability in their mortgage payments. For example, – the 2 year fixed rate with an LVR of 60% or less is now 6.19%.

ANZ has followed its rivals lead by also cutting fixed rates across its 1- to 3-year terms for both owner-occupiers and investors by up to 0.30 percentage points. The bank cut its 1 year by 0.2 percentage points to land at 6.34%, while the two year is 6.24% after a 0.3% cut. The three year fixed is now 6.39% after being trimmed by a modest 0.1%.

Craig Betalli, a Senior Broker at Our Broker, suggests that while NAB’s rate reductions make them the cheapest among major lenders for 2-year fixed rates, other factors have contributed to the rate cuts. 

“The surge of first-time homebuyers, investors re-entering the market, and people seeking security amid economic uncertainties may be driving interest in fixed rates,” he said. 

But before diving headlong into a mortgage, Craig recommends that potential borrowers consider their options carefully. “I’d urge buyers to hold off on finalising your decision regarding fixed rates. For first-time homebuyers and investors, secure a variable loan preapproval, and once you’ve identified a property, decide whether to go with a variable or fixed rate loan with the advantage of a little extra time.”

He continued, “For those contemplating refinancing into a fixed-rate loan, it’s important to consider the loan amounts and the corresponding payments. Consider how much the repayment would truly fluctuate if interest rates were to rise or fall further and make a careful analysis of the risks involved with the help of a finance specialist such as Our Broker.”

Moreover, Craig added that international factors such as economic instability in China and political and economic uncertainties in Europe and the US may have a downward influence future interest rate change. 

If you are considering financing a property purchase or refinancing an existing mortgage this spring, contact Our Broker at 1800 913 677.