NAB hikes three, four and five-year fixed rates

NAB has raised its three, four and five-year fixed rates by as much as 0.3 per cent, but holds two-year offering at 1.99 per cent to keep new customers coming through the door.

NAB has lifted its three, four and five-year rates by as much as 0.3 per cent. Picture: William West/AFP

National Australia Bank has hiked its fixed mortgage rates for the second time in three months, lifting its longer term rates by up to 30 basis points — a day after Reserve Bank of Australia Governor Philip Lowe repeated the cash rate will be on hold until 2024.

Australia’s third largest lender on Wednesday increased its three-year rate by 0.10 per cent to 2.18 per cent, while its four-year rate has jumped by 0.25 per cent to 2.49 per cent. Its five-year rate has risen by 0.3 per cent to 2.79 per cent.

NAB, like its peers, is in a fierce battle to win market share in the ultra-competitive home loan market. It kept its two-year fixed rates steady at 1.99 per cent.

RateCity research director Sally Tindall said the rate hikes came as no surprise.

“Australia’s two largest cities might still be in lockdown but there is widespread agreement this bump in the road is only temporary,” she said.

“Governor Lowe has made it clear rates will not rise until at least 2024. As a result, many banks are still hiking rates of three years and over, however, cuts to two-year rates have slowed.“

NAB had been careful to keep its two-year fixed rate under 2 per cent, Ms Tindall said.

“Without this rate the bank could struggle to keep new customers coming in the door in what remains an ultra-competitive market.

“These fixed rate hikes won’t impact how much someone can borrow, as banks base serviceability tests on the revert rate. However, they do serve as a reminder these rates aren’t going to stick around forever,” she said.

Of the big four, Westpac’s two and three-year fixed rates are now the lowest at 1.89 per cent and 1.98 per cent, while CBA has the lowest four-year rate at 2.29 per cent and ANZ’s five-year, at 2.69 per cent, is better than its peers.

The lowest fixed rate on the market is Greater Bank’s one-year offering at 1.69 per cent, according to financial comparison site RateCity. Ubank and 86 400’s three-year rates are at just 1.85 per cent, while Reduce Home Loans is giving customers the best variable rate at 1.77 per cent.

The latest rate hikes come after Dr Lowe on Tuesday reaffirmed that a lift in the cash rate was unlikely before 2024, and said cooling the hot property market via tighter monetary policy was “not on the RBA’s agenda”.

“The board has said that it will not increase the cash rate until actual inflation is sustainably within the 2–3 per cent target range. It won‘t be enough for inflation to just sneak across the 2 per cent line for a quarter or two,” Mr Lowe said.

“We want to see inflation around the middle of the target range and have reasonable confidence that inflation will not fall below the 2-3 per cent band again. Our judgment is that this condition for a lift in the cash rate will not be met before 2024.”