NAB slash fixed-rate mortgages
NAB cut its fixed-rate mortgages two weeks ahead of the RBA meeting, leading the way among the “big four” banks.
NAB has cut its fixed-rate mortgages across all its loan terms, following Macquarie Bank’s initiative, which had cut its one- to three-year fixed-rate mortgages earlier in mid-January.
NAB’s fixed rate cut is the first one among the “big four”, which also include CBA, Westpac and ANZ.
Canstar.com.au’s rate tracking showed that owner-occupier fixed rates were reduced by up to 0.25 percentage points, while investor fixed loans saw cuts of up to 0.30 percentage points.
In total, NAB has reduced its fixed mortgages by -0.20 percentage points for a one-year term, -0.15 percentage points for a two-year term, and -0.05 percentage points for a three-year term and above.
The bank’s lowest fixed rate now reaches 5.84 per cent and is available for owner-occupiers on a three-year fixed rate, paying principal and interest with a deposit of at least 20 per cent.
Canstar’s data insights director, Sally Tindall, said other banks would likely follow NAB’s initiative and cut their fixed rates.
“The cost of wholesale fixed rate funding has started to ease slightly. This, combined with a prospective cash rate cut, should push other banks into moving on fixed rates,” Tindall said.
“While a few banks are now starting to sharpen their offerings, fixed rates still have a way to fall before they become fashionable again with borrowers.”
Despite being the first to cut its fixed rates, NAB’s rate remains higher than ANZ and Westpac, depending on the term length.
ANZ still has the lowest fixed rate among the big four banks at 5.74 per cent on a two- to three-year fixed rate, while Westpac has the lowest fixed rate at 5.89 per cent on a five-year term.
In comparison, Macquarie Bank, which lowered its cut in mid-January, now offers a two- to three-year fixed rate of 5.55 per cent, paying principal and interest with a deposit of at least 30 per cent.
The lowest fixed rates in the market are right below the 5 per cent mark at SWSbank on a fixed three-year term for owner-occupiers with a loan size of $800,000 or above.
Tindall said that while banks are reducing their fixed rates, home owners have been waiting for a cut for over a year, which should happen at the next Reserve Bank of Australia (RBA) meeting.
“It’s hard to see them throwing in the towel and switching to a fixed rate now when the RBA is poised to move,” Tindall said.
“That said, there’s no guarantee we’ll see a barrage of cash rate cuts, and borrowers should factor this into their thinking."
While all big four banks are now agreeing to a first rate cut in February, the number of cuts remains debatable, with NAB forecasting five cuts, ANZ two cuts, and CBA and Westpac four rate cuts.
“This discrepancy has the capacity to tip the fixed versus variable equation both ways,” Tindall said.
“In times like these, it’s best to put the crystal ball aside, think practically, and be ready for any outcome.”