NAB lifts two, three and four-year fixed rates, with more banks set to follow

NAB has become the latest of the big four banks to raise its fixed home loan rates as property prices jump, with other lenders set to follow.

It’s the second time NAB has raised its four-year fixed rate in less than two months. Picture: Bianca De Marchi

National Australia Bank has become the latest of the big four Australian banks to raise its two, three and four-year fixed home loan rates amid a buoyant property market, with other financial lenders set to follow suit.

The hikes, which vary from 5-10 basis points, come a few weeks after rival ANZ raised its four and five-year fixed rates by 25 and 45 basis points, respectively, but cut its two-year rate by 10 basis points. Westpac also earlier this month upped its two and three-year fixed home loan rates by 10 basis points.

The nation’s biggest bank, Commonwealth Bank, is the last of the big four banks to hold off on lifting rates in June. CBA’s last hike was on May 21 when it lifted its three-year rate by 10 basis points

RateCity.com.au research director Sally Tindall says it’s the second time NAB has raised its four-year fixed rate in less than two months.

“We expect the other big four banks will continue to revise their fixed rates, and that most revisions are likely to be up, especially for owner-occupiers,” Ms Tindall said.

“While most of the hikes have focused on longer term fixed rates, we’re starting to see a growing number of lenders increase their two-year rates, including big banks Westpac and NAB.”

Ms Tindall said CBA hasn’t hiked its two-year fixed rate yet, but “could be the next cab off the rank”.

“Over the last 12 months, rates starting with a ‘one’ have slowly become the norm, particularly for owner-occupiers who have taken the opportunity to fix their rate, but this might not be the case for much longer,” she said.

Ms Tindall said there was rising expectation that the Reserve Bank of Australia will lift the cash rate before 2024, which “could see an end to rates under 2 per cent”.

NAB, led by chief executive Ross McEwan, has raised its two-year fixed rate by 10 basis points to 1.99 per cent (package) and 2.09 per cent (standard).

NAB’s three-year fixed rate has also risen by 10 basis points to 2.08 per cent (package) and 2.18 per cent (standard). Its four-year fixed rate has risen by 5 basis points to 2.24 per cent (package) and 2.34 per cent (standard), according to financial comparison site Mozo.

NAB executive of home ownership Andy Kerr said the bank regularly reviews its interest rates to ensure it continues to offer “customers competitive rates while responding to market changes”.

“These changes do not impact the rates of our existing customers,” he said, adding that its two-year fixed rate remains under 2 per cent.

Earlier this month, CBA was the first of the big four banks to tighten home loan standards after regulators warned the sector over rising credit growth, which has pushed property prices higher.

CBA has changed the home loan assessment floor rate used to assess home and investment home loan applications from 5.10 per cent per annum to 5.25 per cent annually.

The so-called “serviceability floor rate” is used by banks to judge whether borrowers can meet monthly mortgage repayments.