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NAB to buy 86 400: What that means for interest rates

Lucy Dean
·2-min read
Buildings are reflected in a window at a National Australia Bank branch in Sydney, Australia, Tuesday, Feb. 8, 2011. National Australia Bank, one of the country's largest lenders, reported an 18 percent rise in first quarter cash profit, citing a boost in business lending and fewer bad debts. (AP Photo/Rick Rycroft)
Here's what NAB's acquisition of 86 400 will mean for you. Image: Getty.

NAB has been cleared to acquire neobank 86 400, raising questions about the interest rate 86 400 customers will receive.

The deal is due to be finalised by the middle of the year, however the two banks remain tight-lipped on whether 86 400 customers will retain their interest rates, or receive NAB or UBank interest rates.

According to Canstar, if 86 400 customers were to receive UBank or NAB interest rates, they would either end up paying more or less depending on the accounts they held.

Home loan customers

86 400 home loan customers with a three year fixed rate would save $35 a month by moving to NAB’s lower interest rate, or $80 by moving to UBank’s 1.75 per cent interest rate.

UBank has one of the lowest three year fixed rates on the market.

That’s based on owner occupier loans worth $400,000 with a 80 per cent loan-to-value ratio, and a 30-year term.

Similarly, home loan customers with 86 400’s one or five year fixed would save on interest by moving to NAB or UBank’s rates.

However, 86 400 customers on their 2.34 per cent variable rate would pay an extra $73 a month if they received NAB’s 2.69 per cent rate, or an extra $26,233 over the life of their loan. 

Image: Canstar.
Image: Canstar.

Savings account customers

For 86 400 savings customers, the story is a bit different.

86 400 has a base rate of 0.10 per cent and bonus rate of 1.10 per cent, taking it to 1.20 per cent provided customers deposit at least $1,000 into an account each month.

Over the course of the first year, that means someone with a $10,000 deposit meeting the conditions would earn $186.88 in interest.

Someone with the same deposit amount would earn a smaller $171.24 at UBank, or $46.56 at NAB.

Image: Canstar.
Image: Canstar.

Interest rates in Australia are currently at record lows after the Reserve Bank of Australia (RBA) cut rates to 0.10 per cent in March 2020 to curb the effects of the COVID-19 downturn.

The RBA is expected to keep the interest rate on hold when it meets on Tuesday 6 April, however banks are now beginning to move rates.

CommBank broke ranks recently to increase its four year fixed rate, with Bendigo Bank and Aussie Home Loans also now having increased their four year fixed rates.

Image: Yahoo Finance
Image: Yahoo Finance