Yahoo Finance NAB slashes interest rates as more lenders expected to follow major trend
The Big Four bank has cut interest rates on its fixed mortgages as the RBA faces increasing pressure to cut the official cash rate.
NAB has joined many other Aussie banks in slashing fixed rates for both owner-occupier and investment mortgages. The Reserve Bank of Australia (RBA) could cut the official cash rate multiple times over the coming 18 months and several lenders have been trying to get ahead of the expected mortgage relief by locking in customers at lower rates.
The Big Four bank has cut owner-occupier principal and interest fixed rates by up to 0.50 percentage points and investor and owner-occupier interest-only fixed rates by up to 0.65 percentage points. It's the second time in less than three months that NAB has made cuts to its interest rates.
Canstar’s Data Insights Director, Sally Tindall, believes this trend will only continue as we get closer to the RBA finally dropping interest rates from the 13-year high of 4.35 per cent.
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“NAB might be the latest bank to cut fixed rates but it certainly won’t be the last," she said.
“Other lenders – both big and small – are likely to cut fixed rates in coming weeks as competition in this space starts to finally defrost."
NAB's owner occupied loans have fallen between 0.10 to 0.55 percentage points. The biggest drop was for the bank's two-year fixed loan, which dropped from 6.59 per cent to 6.04 per cent.
NAB's lowest fixed rate is now 5.89 per cent for owner-occupiers paying principal and interest with a 40 per cent deposit or more.
Canstar found nearly 40 lenders have cut at least one fixed rate over the last month alone.
ANZ is the only major bank offering its lowest three-year rate that starts with a 6.
To fix or not to fix: What should you do with your mortgage?
But the bid to keep customers locked into a rate could be in vain.
A poll of more than 3,200 Yahoo Finance readers found 68 per cent of people wouldn't fix their rate as they're worried they'll miss out on savings down the track.
RateCity found that the proportion of borrowers opting for a fixed rate is at near record lows.
The latest ABS lending indicator figures show just 2.0 per cent of new and refinanced loans in August opted for a fixed rate.
RateCity.com.au money editor, Laine Gordon, isn't sure whether NAB's move will be enough to attract customers.
“At 5.89 per cent for three years from a major bank, this offer from NAB is likely to get some attention. However, 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,” she said.
“The popularity of fixed rates peaked back in July 2021 when 46 per cent of new and refinanced loans opted for a fixed rate, according to the ABS. This now sits at just 2.0 per cent in the most recent data.
Tindall added that a fixed rate can provide "security and assurance" and predicted there could be "many more fixed rate cuts in the months ahead".
"If you’re someone looking for the security a term deposit can bring, know that these rates are also likely to keep on falling in the months ahead. For these savers, it might be a matter of moving sooner rather than later," she said.
“The difference between a competitive rate, and a woeful one has the potential to have a significant impact on your finances.”
What other banks have cut their fixed rates?
Macquarie Bank: A two-year home loan interest rate used to stand at 5.59 per cent but was lowered to 5.39 per cent last week. This rate only applies to owner-occupied loans for people who can front up a 30 per cent deposit but it's the most competitive in the country for similar mortgages.
Bankwest: The bank has cut rates on most of its fixed rate loans by up to 0.5 per cent, with customers offered a 5.89 per cent rate its 2- and 3-year fixed rates for loan-to-value ratios (LVR) of 80 per cent or less.
ubank: Lowered interest rates on selected fixed rate loans with cuts of up to 0.73 per cent. Borrowers can get a 5.79 per cent rate for two, three and five-year fixed rate terms with an LVR of 80 per cent or less. The bank also cut its flex variable interest rate by up to 0.10 per cent.
ING: It has cut its fixed rates by up to 0.60 per cent and is offering a 5.84 per cent rate for two, four and five-year fixed rate terms for borrowers with an LVR of 80 per cent or less. The bank also shaved 0.05 per cent off variable rates for borrowers with LVRs between 80 to 90 per cent.
Other banks that cut rates included Bank of Sydney, Gateway Bank, Greater Bank, Heritage Bank, IMB Bank, ME, Newcastle Permanent, People’s Choice, Police Bank, Southern Cross Credit Union and Teachers Mutual Bank.
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