NAB discounts variable rates for new home loan customers

Aussie homeowners have a new low rate home loan to consider after major lender, NAB announced a 48 basis point discount on its Base Variable Rate Home Loan.

NAB has introduced a low 3.69% variable rate (3.73% comparison rate*) for new owner occupier customers making principal and interest repayments.

Mozo Product Data Manager, Peter Marshall says the new offer is the latest in a string of sharp rate cuts aimed at attracting new customers, after NAB joined the Commonwealth Bank and ANZ in cutting fixed rate home loans earlier in the month.

“We’re seeing a lot of rate cuts at the moment as lenders try to get people through the door and while this is definitely a great rate from NAB, rates in general are still predicted to be heading north over the medium to long-term,” he said.

The rate cut comes after the Banking Royal Commission recently heard allegations that NAB bank managers took bribes for fraudulent home loans across a number of Sydney branches.

“This could possibly be NAB trying to generate some positivity after a hard week of headlines. As the Banking Royal Commission continues, consumers might see more good news stories like these,” said Marshall.

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But there are a couple of question marks left with this offer. Firstly, it's unclear how long the offer will be available. Also, with market rates expected to rise over the next couple of years, borrowers should be aware that this offer is a discount off the base variable rate, which means the underlying rate may rise at any time.

How does the new rate stack up?

But how does NAB’s new rate stack up when it comes to its key competitors - the other three big banks?

According to the Mozo database, the NAB offer currently trumps any other ongoing rate from a big bank. The lowest ongoing variable rate from both the Commonwealth Bank and ANZ is 3.99% (4.01% and 4.03% comparison rates, respectively*), while Westpac’s is even higher, at 4.59% (4.64% comparison rate*).

But while the NAB rate may be competitive at the moment, Marshall warned that it doesn’t necessarily mean it is here to stay.

“It is interesting that NAB has released this discount on its variable home loan product, which means that it can hike the rate whenever it likes. With the RBA expected to consider lifting rates in the next year or so, and offshore funding costs increasing, it’s likely that this and other variable rates will move up rather than down,” he said.

Playing the long game

Homeowners might jump at the chance to gobble up a low rate offer from one of Australia’s biggest lenders, but it might not necessarily be the most cost-effective option.

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“This rate certainly competes at the pointy end of the market but small lenders still offer better rates over the life of the loan, especially for homeowners who are prepared to go with an online home loan provider,” said Marshall.

If you’re an Aussie home buyer after a low variable rate, you can scour Mozo’s variable rate home loan table to find an offer that will help you get your foot in the door of a new property, but here are three market-leading rates available right now - without an introductory period.

• 3.39% - Reduce Home Loans Rate Lovers Variable Home Loan
• 3.49% - Easy Street Standard Variable Home Loan
• 3.52% - loans.com.au Essentials Variable and Tic:Toc Variable Home Loan

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The
comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.