This article is from the Australian Property Journal archive
AFTER bucking the trend in September, the National Australia Bank will increase home loan interest rates for owner occupiers and residential investor borrowers.
NAB has cited higher funding costs in its decision to lift rates by 0.12% for owner occupiers paying principal and interest, and 0.16% for investors and interest only customers, effective 31 January 2019.
A customer on a discounted variable rate will now pay $25 extra per month, which translates to almost $300 annually.
A residential investor with a principal and interest variable rate home loan will pay an additional $31 each month on their principal and interest repayments, or $372 each year.
A residential investor with interest only variable rate home loan will pay an additional $40 each month on their home loan repayments, or $480 each year.
RateCity research director Sally Tindall said, “NAB’s previous decision to keep rates on hold was designed to win back the trust of their customers. It was also a play to get new customers in the door.
“The strategy appears to have worked. In October 2018, NAB surpassed ANZ in terms of home loan market share. They now have the third largest home loan book, according to APRA data.
“Already this year we’ve seen BoQ and Virgin Money hike rates due to cost of funding pressures. Now that NAB has hiked as well, others are likely to follow in its shadow,” she predicts.
NAB chief customer officer – consumer nanking, Mike Baird said the decision to increase rates was not taken lightly and the bank was responding to sustained increases in funding costs.
“Our decision to hold our Standard Variable Rate since September last year, the only major Australian bank to do so, has led to around $70 million remaining in the households of more than 930,000 NAB customers,” Baird said.
“We have been deliberate in our approach to limit the impact on owner occupier borrowers by keeping their rates as low as possible to encourage both new and existing customers to pay down their loan sooner,”
Meanwhile Baird said more than 100,000 customers are ahead on their repayments.
Big four banks – how they compare
| Bank | Standard variable rate |
| ANZ | 5.36% |
| CBA | 5.37% |
| NAB | 5.36%* |
| Westpac | 5.38% |
Based on their owner occupier rates, paying principal and interest. * From 31 January.
NAB discounted variable rate
| Loan Amount | Old Rate | New Rate | Monthly difference | Annual difference |
| $350,000 | 4.39% | 4.51% | $25 | $299 |
| $500,000 | 4.39% | 4.51% | $36 | $427 |
| $1,000,000 | 4.34% | 4.46% | $71 | $851 |
NAB standard variable rate
| Loan Amount | Old Rate | New Rate | Monthly difference | Annual difference |
| $350,000 | 5.24% | 5.36% | $26 | $313 |
| $500,000 | 5.24% | 5.36% | $37 | $447 |
| $1,000,000 | 5.24% | 5.36% | $75 | $894 |
The above tables are based on rates for owner occupiers paying principal and interest. Source: RateCity
Australian Property Journal
