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NAB slashes fixed-rate home loans ahead of RBA meeting

NAB has joined Commonwealth Bank and ANZ in cutting its fixed rates.

NAB branch and person walking outside.
NAB is the latest bank to slash its fixed-rate home loans. (Source: Getty)

NAB has slashed its fixed-rate home loan rates ahead of the Reserve Bank (RBA) meeting on Tuesday.

The major bank cut its 3-year fixed rate by 0.5 per cent to 5.54 per cent for owner-occupiers, making principal and interest repayments. For investors, it slashed fixed rates by 0.6 per cent to 5.64 per cent.

NAB also cut 0.3 per cent from its 4-year term, 0.25 per cent off its 5-year and 2-year terms, and 0.15 per cent from its 1-year term.

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RateCity research director Sally Tindall said fixed rates were edging their way south, but still remained “on the nose” with most borrowers.

“While the majority of banks’ lowest rates are still variable, in the case of NAB and ANZ, their lowest rates are now fixed,” Tindall said.

“The catch is, if you want these fixed rates, you have to be willing to lock up your loan for the next three years, a proposition many customers aren’t keen on committing to at this point.”

With the cash rate now at or near its peak, Tindall said locking in a fixed rate in the mid 5s was a “harder pill to swallow”.

Fixed rates accounted for just 5.4 per cent of new loans in February, according to the latest ABS lending indicators, a drop from 28.1 per cent in February last year.

NAB follows CBA, ANZ

The move follows CBA and ANZ, who announced similar cuts in recent weeks. CBA slashed its 3-year fixed rates by 0.4 per cent in early April, while ANZ cut its fixed rates for the same period by 0.6 per cent.

ANZ is currently offering the lowest 3-year fixed rate of the Big Four, at 5.49 per cent. But this is still 0.50 per cent higher than the lowest fixed rate on the market - The Capricornians 3-year rate at 4.99 per cent.

Like the other big banks, NAB also hiked the rates on its basic variable home loan for new customers. The 0.05 per cent hike is NAB’s second hike for new customers in the past two months, in addition to the RBA March hike of 0.25 per cent.

Tindall said she expected banks would continue cutting fixed rates over the next couple of months, with Westpac likely to be the next cab off the rank.

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