November 14th 2024.
NAB has recently made a move to attract those with mortgages by announcing a pre-Christmas decrease in its basic variable home loan rate. This comes as a pleasant surprise, especially since an official interest rate cut from the Reserve Bank is not expected for several months.
Today, the bank announced a 0.4 per cent reduction in its base variable home loan rate for new customers, bringing it down from 6.84 per cent to 6.44 per cent. According to Mozo personal finance expert Rachel Wastell, this means a substantial monthly repayment decrease of $126 for those with a $500,000 loan. This is a significant reduction, especially in the absence of an RBA rate cut.
Wastell also pointed out that historically, the RBA has only cut interest rates by 25 basis points if they were to make a move in November. Therefore, NAB's 0.4 per cent decrease is almost equivalent to the value of two RBA cuts. However, despite this positive news, NAB's current offering remains higher than that of its competitors ANZ and Commonwealth Bank, who both have digital-only mortgage rates that are about 0.3 per cent lower.
In comparison, NAB's rates are on par with Westpac's, but the former requires a much lower minimum deposit compared to its big four rival. According to Canstar data insights director Sally Tindall, NAB's no-frills mortgage rate has been an outlier among the big four for months now, especially since the introduction of CBA's and ANZ's digital-only home loans. Tindall believes that with this rate cut, NAB's lowest variable rate is now in line with the other big banks.
Tindall also mentioned that in recent months, NAB's home loan book has been slow, especially with the recent gains made by CBA and ANZ. This move is expected to help the bank reverse this trend. However, existing NAB borrowers may find this news frustrating as the rate cuts are only applicable to new customers. Nevertheless, Tindall encourages existing customers to reach out to the bank and inquire about a potential rate cut.
Although the RBA's next meeting is just a few weeks away, it is not expected that they will make any changes to the interest rate until February. This is the sentiment shared by most economists and all of the big four banks.
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