NAB cuts 3-year home loans ending Big Four fixed-rate stalemate

By Jack Dona · · 2 min read
Fact Checked
A pedestrian walks past a Sydney NAB bank branch

Today, NAB cut its 3-year fixed rate home loan by 0.60%, marking the first time a Big Four bank has shifted fixed rates since the Reserve Bank of Australia (RBA) hiked the cash rate to 4.35% in November 2023.

The cut brings NAB’s 3-year Tailored Home Loan (Fixed) down to 6.04% p.a. (6.80% p.a. comparison rate*) and means a borrower with 80% LVR on a $500,000 home loan (over 25 years) could save $186 per month in those initial three years, according to our mortgage repayments calculator .

Mozo spokesperson, Rachel Wastell says this decision could be taken as the Big Four bank’s cash rate forecast , but could also be a competitive play.

“NAB's decision to slash their 3-year fixed rate by 60 basis points suggests they anticipate a significant drop in the cash rate over the next few years,” said Wastell.

But she also noted that such an ‘aggressive’ cut by NAB could be a response to ANZ’s recent acquisition of Suncorp and a way to lure in customers by betting on future cash rate reductions.

So, how does NAB’s 3-year Tailored Home Loan compare?

NAB now offers the leading 3-year fixed rate out of all the Big Four banks and beats the average 3-year fixed rate in the Mozo database, which is currently 6.29% p.a. (OO, P&I, $400,000, <80% LVR).

The rate drops significantly for borrowers with 70% LVR, who may be able to get a 3-year fixed rate at 5.99% p.a. (6.64% p.a. comparison rate*).

Wastell describes the rate cut as a ‘game-changer’, but erred on the side of caution.

“For borrowers seeking the security of a Big Four bank and want the predictability and stability of a fixed rate home loan, NAB’s rate cut could be a game-changer.

“With rates as low as 5.99% p.a. for larger deposits, this move can provide significant savings compared to higher rates from other major banks.

“However, borrowers considering longer-term fixed rates should be cautious. When the cash rate eventually drops, those on fixed rates might end up paying more than those on variable rates.

“Remember, banks are experts at predicting cash rate movements, so locking in a rate is essentially a bet against the house.”

Before you decide to fix your rate, make sure you understand the differences between fixed and variable rates and ensure that you’ve done your due diligence on interest rates and features.

If you’re ready to get started, compare home loans now!