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NAB lowers variable interest rate on home loans

Close competition between the big four banks has seen National Australia Bank (NAB) cut its variable interest rate on home loans from 0.1% to 2.19%, although the change only affects new homeowners- occupants.

NAB’s lowest rate is now in line with the other big four banks, however, it requires a 20% deposit, which is lower than Westpac and ANZ which require at least 30%.

While the variable rate saw a reduction, NAB increased its fixed rates by up to 0.5% for homeowners and investors.

The five-year fixed rate is up 0.5% to 4.19%, equivalent to new borrowers paying $144 more per month on a $500,000 30-year mortgage .

This is the sixth time NAB has raised its 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 other big banks.

“While fixed rates are rising rapidly, there is still a lot of competition in the market for variable home loans,” Ms Tindall said.

“NAB bowed to pressure and cut its base floating rate to match its big bank rivals Westpac and ANZ.”

“Despite no change from the RBA (Reserve Bank of Australia), we have seen the average base floating rate of the big four banks fall by 0.35% over the past year, but only for new clients.

“For anyone with a variable rate, now is the time to haggle with your lender before the RBA’s scheduled rate hikes begin.”

After a spike in interest rates on fixed rate products, the latest data from the Australian Bureau of Statistics shows that new borrowers are returning to variable loans, with 66% of new loans settled in January at variable rates.

Ms Tindall said the higher interest costs with current fixed rate loans are seeing customers switch back to variable loans.

“With the majority of Big Four fixed rates now starting with a ‘3’ or higher, it’s no surprise to see borrowers opting for lower variable rates,” she said.

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