NAB rate cut: Big bank takes lead on investor home loans

By Katherine O'Chee ·
Sprinting man wins race

As competition in the home loan market continues to heat up, NAB has cranked things up a notch. The bank’s move this week to slash variable rates for investors has made its offer the best among the big four.

The interest rate for the NAB Base Variable Rate Home Loan now sits at 3.09% (3.09% comparison rate*) for investors with a loan-to-value ratio (LVR) of 80% or less and making principal and interest repayments. 

For context, LVR refers to the percentage of property value you’re borrowing from the bank. So if you’ve saved up a 20% deposit, then your LVR would be 80%.

NAB’s five-basis point cut places it just ahead of ANZ’s rate of 3.12% (3.16% comparison rate*), available on its Simplicity PLUS home loan for investors with a maximum LVR of 80%. 

NAB’s latest rate reduction also further widens its gap with Westpac and Commonwealth Bank: 

  • The Westpac Flexi First Option Investment Loan has a rate of 3.19% (3.20% comparison rate*) for investors with a 70-90% LVR. However if your LVR is 70%, you can snag a rate of 3.09% (3.10% comparison rate*), which is as low as NAB’s.
  • Meanwhile, the CommBank Extra Home Loan has a rate of 3.27% (3.28% comparison rate*) for investors with a maximum LVR of 80%. That’s a 18 basis point difference with NAB.

How does NAB compare to market leading rates?

Right now, NAB’s offer is 73 basis points less than the average variable investor rate in the Mozo database which sits at 3.82%. 

However, if you’re after the sharpest rates in the market, then the big bank may not be your best bet. The top variable investor rate according to Mozo is 2.59% (2.63% comparison rate*) through Easy Street. 

Besides Easy Street, there are also plenty of other smaller banks with more competitive rates than NAB. In fact, 27 lenders in the Mozo database currently offer variable investor rates below 3.00%.

Property investment: Is now a good time to buy?

It’s true rent prices across Australia have been dropping over the past several months due to lower rental demand amid COVID-19, and that may have dampened the mood of some investors. It also demands that a prospective investor do their homework and get some sound financial advice first.

But it’s not all bad news. For one, there are many more opportunities on the table for keen investors to snatch up a stellar rate.

Case in point: as of August 2020, the average variable rate for investors making principal and interest repayments is 3.82%. Go back exactly three years and you would have been looking at an average as high as 4.90%.* 

Interested in taking advantage of some of the lowest investor rates we’ve seen in years? Scroll down below for a snapshot of what’s on offer, or jump over to our investment property loans comparison table for even more options.

Compare property investment loans - page last updated September 22, 2020

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  • 1.99% p.a.variable for 12 months and then 2.74% p.a.

    2.71% p.a.

  • 2.69% p.a.

    2.70% p.a.

  • mozo-experts-choice-2020

    2.79% p.a.Apply now to get this rate from 30 Sep

    2.79% p.a.Apply now to get this rate from 30 Sep

  • 3.24% p.a.

    3.26% p.a.

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*Data drawn from home loan statistics page, as of 13 August 2020.

*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.

**Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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Katherine O'Chee
Katherine O'Chee
Money writer

Katherine O’Chee is Mozo’s international money transfer and forex expert and business banking writer. She keeps Mozo’s readers on top of the latest news and writes in-depth features to inform and help Australians make smarter financial decisions. Her work has been published in major media outlets including Sydney Morning Herald, SBS News and Bangkok Post. She has a Bachelor of Arts (Media and Communications) from the University of Sydney.