Some fixed rates are also cut
Australia’s two big banks have made variable rate moves, with Westpac hiking rates for new customers, and NAB bucking the trend with a rate cut for customers with small deposits, according to RateCity.com.au.
Westpac has raised new customer variable rates on its Flexi First Home Loan by 0.1 percentage points – the third time Australia’s second largest home lender has done so since March 1.
See table below for the recent changes to Westpac’s Flexi First Option home loan.
“This move by Westpac shuts the door on advertised variable rates under 6% from the big four banks,” said Sally Tindall (pictured above), RateCity.com.au research director. “This is the 22nd hike to new customer rates from a big four bank since March 1, in a strategic move to walk away from the cut-throat competition in the home loan market.”
NAB, meanwhile, is “going against the tide” by dumping the tiered rates for different deposit sizes on its basic variable rate loan, in a move which saw Australia’s third largest mortgage lender essentially slashing the rate for owner-occupiers with deposits of less than 20% by 0.7pp to 6.49%.
See table below for the recent changes to NAB’s Base Variable Rate home loan.
NAB’s rate cut meant the lender now has the lowest big four bank ongoing variable rate for customers with less than a 20% deposit.
“This is an unusual move from Australia’s third largest home loan lender. For years, banks have been moving to a risk-based pricing system where borrowers with small deposits are slugged with higher rates,” Tindall said. “NAB is opening the door specifically to owner-occupiers with small deposits, who are often first-home buyers madly searching for options to get a foot in the market.
“A low variable rate can help boost a new borrower’s chance of getting their mortgage approved, but buyers should be aware they’re likely to be offered a significantly lower rate if they look beyond the big four banks.”
Tindall said it is unlikely that we’ll see an advertised variable rate from a big four bank under 6% until the Reserve Bank starts cutting the cash rate.
Select fixed rates slashed
The two banking powerhouses also made some changes to their select fixed rates.
NAB’s two-year fixed rate cut for owner-occupiers paying principal and interest left it with the lowest two-year fixed rate out of the big four banks. See table below.
Westpac and its subsidiaries St George, Bank of Melbourne, and BankSA have also cut their two-year fixed rates, but only for investors.
NAB and Westpac’s fixed rate cuts follow those from CBA last month in what, RateCity.com.au said, could be an early sign some fixed rates are now on their way down.
That said, the comparison website’s database showed that most of the fixed rate changes over the last month were hikes, rather than cuts.
“Both Westpac and NAB are trailing in CBA’s footsteps by cutting select fixed rates. While this goes against the overall trend in the market, there’s every chance other lenders will now follow,” Tindall said.
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