NAB to pocket extra $28 million a month with latest home loan rate hike
In bad news for borrowers, the National Australia Bank has lifted both its variable owner occupier and residential investment home loan rates by as much as 25 basis points, with Mozo data estimating the move will earn the bank an extra $28 million in interest each month.
Update 17/3/17: Westpac has also announced rate increases to its variable home loan rates for both owner-occupiers and investors. Read the full story here.
The rate hike, which will come into effect on March 24, will see NAB’s owner occupier variable rate rise from 5.25% to 5.32% and its variable residential investment rate increase from 5.55% to 5.80%.
NAB cited increasing funding costs, competition and regulation as reasons for the rate rise, responding in part to the news last week that the number of investor borrowers had surged in January.
“The decisions we make on interest rates are difficult ones, and we want to assure our customers we do not take them lightly as we seek to achieve the right balance for all our stakeholders while considering the dynamic financial and economic environment in which we operate,” said Antony Cahill, NAB’s Chief Operating Officer.
“We’re committed to managing our investor lending growth in line with the regulator’s guidance.”
For owner occupiers, with the standard variable rate loan the rate hike will result in an extra $13 a month - based on a $300,000 loan over 30 years.
While NAB customers cop an increase in their home loan repayments, the bank itself will earn $950,000 a day or roughly $350 million a year in additional interest as a result of the hikes.
NAB’s new 5.32% variable owner occupier variable rate is now the highest of any of the big four banks, compared to the Commonwealth Bank (5.22%), ANZ (5.25%) and Westpac (5.29%).
Its new variable residential investment rate of 5.80% is also now considerably higher than the other big four banks, compared to the Commonwealth Bank (5.56%), Westpac (5.56%) and ANZ (5.60%).
Kirsty Lamont, Mozo’s Director of Marketing and Communications, suggested that the move was likely to be part of a trend of out of cycle rate hikes as concerns grow from regulators like the Australian Prudential Regulation Authority (APRA) about the levels of investor lending.
“As the period of record low rates appears to be at an end, investors and owner occupiers should be aware of possible increases in their monthly repayments and look to review their mortgage interest rate,” said Lamont.
In better news for younger Aussies looking to get into the market, NAB has also announced a cut in its fixed interest rate for first home buyers from 3.98% to 3.69% for fixed two year loans.
The new 2 year 3.69% fixed rate equals the best on the market for new home buyers, with Bank Australia also offering the same deal.
“Every dollar counts when you’re buying your first home, and this offer for first home buyers will provide real support to Australians wanting to enter the property market,” said Cahill.
Cahill also announced that NAB will now recognise rental history as a form of ‘genuine savings’ for a first home buyers home loan application.
Thinking about making a move into the property market? Variable owner occupier and residential investor rates from the big banks remain higher than the market average, so make sure you compare the lowest rates around at the Mozo home loan hub.
* 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. You can change the loan amount and term in the input boxes at the top of this table. 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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