NAB drops variable mortgage rate, but there’s a catch

A big group of mortgage holders are being warned their banks could be ‘taking them for a ride’. Here’s why.

One of Australia’s biggest banks has followed the lead of its competitors and cut variable mortgage rates — but there’s a catch.

NAB is offering a reduction on variable home loans of 0.30 per cent for new customers only.

Analysis from financial comparison website Rate City shows 23 lenders, including Commonwealth Bank, Westpac and ANZ have lowered variable rates for new customers since the Reserve Bank began hiking interest rates in May.

However, existing variable rate customers have seen their rates rise by 1.75 percentage points on average over the same period.

Variable home loan customers are being encouraged to make sure they’re getting the best rate possible.

Rate City research director, Sally Tindall said banks could be taking their existing customers for a ride.

“Log on to your banking app and check what rate you’re paying. While you’re there, work out the exact name of your loan,” she said.

“Then look at your bank’s website to see what rate it’s offering new customers.”

Ms Tindall said NAB had been forced to lower its new customer variable rates to keep up with the competition.

“With refinancing at record highs and billions of dollars’ worth of fixed loans coming to an end, lenders are cutting variable rates to attract new borrowers,” she said.

“If you think as a loyal, long-serving customer your bank is doing right by you, double check that’s actually the case.

“The results could surprise you.”