National Australia Bank drops home loan interest rates

THE National Australia Bank has today announced a raft of changes to home loan deals that will give borrowers big savings.

HOME loan borrowers have been given a reprieve after another big bank dropped rates across many mortgage deals.

National Australia Bank is the last of the big four banks to this month announce it was moving many fixed rate offerings, reducing some deals by as much as 50 basis points.

The changes kick in today and include falls to both owner occupier and investor deals.

On a five-year fixed owner occupier principal and interest deal NAB has dropped the rate from 4.59 per cent to 4.09 per cent — a drop of 50 basis points delivering borrowers huge savings.

The big four banks have all announced moves to fixed rate home loans deals this month.

On a $300,000 30-year loan this will reduce monthly repayments from $1536 to $1447 — a saving of $89 per month new calculations by financial comparison website Mozo has found.

While for investors, three-year interest-only fixed deals have fallen from 4.49 per cent to 4.19 per cent — a drop of 30 basis points and a monthly saving of $75 per month.

All these changes only apply to new fixed rates deals and not for existing borrowers.

A NAB spokeswoman said the changes was a result of the bank wanting “to help Australians achieve their property goals.”

The Reserve Bank of Australia board this week kept the cash rate on hold at 1.5 per cent.

Experts believe borrowers may not see another cash rate move until later this year or in 2019.

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Home Loan Experts’ managing director Otto Dargan said while the latest reductions to fixed rate loan deals is great for borrowers, he warned these types of deals restrict a borrower’s flexibility.

Home Loan Experts managing director Otto Dargan said fixed rate home loan do not suit all borrowers.

“While fixed rates are at historic lows, borrowers should be mindful that fixed rate loans can have high exit fees and other restrictions so they aren’t suitable for everyone,’’ he said.

“There can be large differences in rates between lenders and special offers that are not advertised so it pays to shop around or talk to a mortgage broker.”

RATE MOVES: Big banks reduce home loan interest rates

The banking regulator, the Australian Prudential and Regulation Authority, last year introduced measures to cap interest-only lending at 30 per cent of all new loans issued.

Interest-only lending has typically been popular among investors who pay a small amount on their loans and no principal while relying on capital growth.

Mozo spokeswoman Kirsty Lamont said there’s now some “compelling deals” available to borrowers but they may be short lived.

Mozo spokeswoman Kirsty Lamont said there was now some “compelling rates” for borrowers.

“Increased uncertainty within the global economy is likely to bring these bargain basement fixed rates to an end,’’ she warned.

“Borrowing costs for Australian banks are predicted to rise with the Federal Reserve looking to hike rates in response to a recent sharp rise in the price of US bonds.

“This means the pattern of fixed rates is likely to start trending upwards over the next six months.”

On a three-year fixed owner occupier principal and interest details NAB has the cheapest rate at 3.94 per cent, compared to 3.99 per cent for CBA, Westpac and ANZ.

On three-year fixed investor interest only deals, NAB has the cheapest rate at 4.19 per cent, compared to CBA at 4.29 per cent, ANZ at 4.49 per cent and Westpac at 4.54 per cent.

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