NAB hikes mortgage rate for all

From NAB:

NAB has today announced a range of changes to its home loan interest rates, including a new special fixed rate for first home buyers – the lowest rate ever offered by NAB – and increases to interest rates for new and existing owner occupier and residential investor borrowers.

NAB Chief Operating Officer Antony Cahill said: “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.

“The difference between what we charge and how much it costs us to fund a mortgage remains under pressure, with intense competition, increasing regulation, and elevated funding costs.

“By making a series of changes, both up and down, we are seeking to balance these across our entire mortgage portfolio.”

Mr Cahill added: “Interest rates remain at near historic lows, and around 85 per cent of NAB customers pay below our current standard variable rate through a range of discounts available on our home loan products, including NAB Choice Package, and our highly competitive fixed rate terms.

“We understand these changes will affect customers in different ways, and we always encourage customers to have a conversation with their banker or broker about what home loan suits them best.”

First Home Buyers

From today, NAB is offering first home buyers a record low 3.69% per annum fixed rate for two years, for owner occupier, principal and interest loans. This compares to NAB’s current advertised 2 year Package Fixed Rate for Home Loans rate of 3.98% per annum.

“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,” Mr Cahill said.

“This is the lowest home loan rate ever offered by NAB, and it will help Australians entering the property market for the first time to achieve their home ownership dreams.”

Eligible customers will save around $50 a month in repayments over the two year fixed period with this special offer (based on a $300,000 loan).

NAB has also recently introduced changes to help more first home buyers secure a home loan.

“We know it can be hard for prospective first home buyers to save for a deposit and rent at the same time, so we now recognise rental history as a form of ‘genuine savings’ in home loan applications,” Mr Cahill said.

Owner Occupiers

NAB’s Variable Rate for Home Loans (Standard Variable Rate) for owner occupier customers will increase by 0.07% per annum, to 5.32% per annum, from Friday 24 March 2017.

This change will see NAB customers with a standard variable rate home loan pay an extra $13 each month on their home loan principal and interest repayments (based on a $300,000 loan over a 30-year term).

“I encourage customers who want certainty about their repayments, or to find out what other options are available, to speak with their banker or broker, and whether a package, fixed rate, or split home loan might be right for their circumstances,” Mr Cahill said.

Residential Investor Borrowers

From Friday 24 March 2017, NAB’s Variable Rate for Residential Investment Home Loans will increase by 0.25% per annum, to 5.80% per annum.

Mr Cahill said the investor segment continues to be important to NAB. Given strong growth in the investor segment, it is essential that NAB continues to manage its investor portfolio responsibly.

“We’re committed to managing our investor lending growth in line with the regulator’s guidance,” Mr Cahill said.

Comments

  1. I guess this is what the tough words from the RBA translates into …. the banks freely jacking up rates for all as they seem fit?

    • Rates go up, defaults go up, profits go down, risks go up, costs go up, rates go up ->

      ………………..defaults go up, profits go down, risks go up, costs go up, rates go up ->

      ………………..defaults go up, profits go down, risks go up, costs go up, rates go up ->

      ………………..defaults go up, profits go down, risks go up, costs go up, rates go up ->

      Unemployment goes up, bank fails.

      China recession, bank fails.

      Fed raises rates, bank fails.

      etc, etc……

  2. SamscoutMEMBER

    Given that most banks have hiked interest rates over the last 12 months to offset the RBA cuts doesn’t this put paid to the notion that its low interest rates that is causing housing prices to rise.

    Most mortgages seem to be around the 4.5 to 5.5% amount which is about what is was 12 months ago. There’s a few honeymoon rates that are lower but I doubt that those would be what’s funding the greater than $1 million sydney houses.

    The RBA should wake up to themselves and get on with tighter macroprudential.

  3. No one pays the advertised rate. Banks will discount due to competition and the need to maintain growth of the loan book.

      • I reckon it’s still got a bit of steam left, they’ll ride the margin down to zero. Only an external shock will cause trouble.

    • Ronin8317MEMBER

      While borrower normally pay at a discount, it is referenced to the advertised headline rate. So it will go up by that much.

  4. I applaud the Australian version of honeymoon rates for barely-creditworthy chumps! Well done, NAB!

  5. I applaud the Australian version of honeymoon rates for barely-creditworthy chumps leveraging into overpriced assets! Well done, NAB!

    • LOL, nice to at least see lower rates for FHBs even if it is a token message. I particularly like the save $50 per month. When buying a $1M abode in Sydney it hardly resonates for me.

      I do see a sudden change recently though at all levels trying to get FHBs into the market. Replace foreign and local investors/speculators with actual home buyers. It’s like they are trying to plug an opening vortex. I wonder how many FHBs are going to take the new bait.

      My sincere hope is that they wait it out until the dust settles a bit.. with prices so damn high most must be thinking it’s not a great time to jump in?

    • Its almost like there was something called a mortgage reset which was the basis of several movies detailing the cause of the global financial crisis whereby those least able to afford loans, were suckered into those loans with cheap teaser rates which then reset (after 24 months no less) leaving them unable to pay…..

      Its just staggering that this is even ALLOWED to happen…..

      “Hey young kids get your first 12 shots of smack absolutely FREE !”

      .

  6. Watch as housing investors do the ring around to all their younger relatives who don’t own a house ask if they can put it in their name.

    • Why would they need to ? All you need to do is buy the property, move in for a month and present utility bills to the bank showing you live there. Now its an owner occupier loan. No transfer costs required, hence my recent comments suggesting Ato keep track of what property is or is not under an investment loan. No investment loan then no negative gearing and no lower rate from the banks. Very simple and massive effect on dodgy buyers.

  7. .07 is pretty weak ! and just goes to show how fragile and over exposed the residential market is. This is just a test fire to see how much it effects the economy. Nothing substantial will happen till they limit Foreign investors to Apartment only purchases.

  8. First home buyers borrowing 300K will save 50 bucks a month. If you want to live within 50 klms from any Capital you will save 150 bucks a month on your 900 K loan.

    Problem solved !

    • I should also say that I am very pleased with this result. Self imposed macro-prudential good on NAB.

  9. Geez, Aus is really intent on “rebalancing” from the investor boom to a FHB boom. Send in the bigger fools!

    Surely these intro fixed rates to FHBs must earn the name “Subprime”.

    • If i rember rightly, it was loans comming off special honeymoon rates that sparked the gfc?

      • Yes, but these were structured so that they would inevitably revert to a much higher rate after a set period, irrespective of Reserve Bank moves. The end result was to destroy the borrower but leave the building still standing, hence the alternative name: ‘Neutron bomb mortgages’.

      • @d672c804897d

        yeaaaaaaaaah naaaaaaaah.

        Just interest rate reset with teaser rates.

        Subprime has already been shown. Not even subprime – NINJA loans as well.

        Just leave enough cash to get your family to somewhere safe.

  10. Nice to see some preferential treatment for FHBs! But they’d better pay off as much as possible before the honeymoon ends..