Big four bank NAB slashes home loan rates – but there’s a catch

One of Australia’s largest home loan lenders has announced a pre-Christmas cut to interest rates on its basic variable rate home loans.

National Australia Bank has sliced rates on its base variable home loan for owner-occupiers and investors paying principal and interest by 0.4 per cent from 6.84 to 6.44 per cent.

The catch with the new rate is that it only applies to new customers, meaning little for mortgage holders awaiting relief from their lender and the RBA.

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It is estimated the cut could save customers with a $500,000 loan close to $130 on repayments each month.

Experts say the move is designed to attract new customers, but the bank is still beaten by other big four competition when it comes to the lowest advertised variable rates.

“Over the last few months, NAB’s home loan book has been sluggish, particularly in light of the recent gains made by CBA and ANZ. This move should help the bank reverse this,” Canstar data insights director Sally Tindall said.

“Existing NAB borrowers could find today’s news frustrating, as these rate cuts are only on offer for new customers.

“However, if you’re an existing customer, there’s absolutely nothing stopping you from picking up the phone and asking for a rate cut.“

Tindall said there are 38 lenders offering variable rates of less than 6 per cent.

On official cash rate cuts, Tindal said the timing is still “incredibly grey”.

NAB has revised the forecasted timing of the first official cut from February to May, while the other members of the big four maintain it will come in the second month of the year.

“Unemployment has held steady for three months in a row, giving the RBA the green light to keep the cash rate at 4.35 per cent, for now, particularly seeing as underlying inflation is still a fair way above the bank’s 2 per cent to 3 per cent target band,” Tindall said.

“At this stage, it’s difficult to see the RBA cutting rates as its first point of business in 2025. The Board is likely to want to see at least two more rounds of favourable quarterly inflation data before cutting the cash rate.

“Whether the RBA starts cutting the cash rate in February or May might seem minor in the grand scheme of things (but) on a decent-sized mortgage it can add up.

“Canstar research shows the average owner-occupier with $600,000 debt and 25 years remaining could end up paying almost $2,000 extra in interest over the next two years as a result of a May start to the rate cuts, as opposed to February.”