NAB Cuts Variable Mortgage Rates

Post by Sharat on April 14, 2018 · Under loans · Comment 

NAB has introduced a new variable interest rate owner occupied mortgage product with an interest rate starting at just 3.69% for customers who choose to make both principal and interest payment. This new offer is just the latest in series of sharp cuts in interest rates as banks battle to acquire new customers. NAB also followed the lead of CBA and ANZ in cutting interest rates on fixed home loan rates as well.

Generating positive publicity

The rate cut follows allegations put forward to the Banking Royal Commission that NAB managers were accepting bribes to process fraudulent home loan across a number of branches in Sydney. As a result, the decision to cut rates may simply be an attempt to generate positive spin on what has been a damaging few weeks. There are however a few questions regarding the offer. To begin with, there is no indication how long the offer will run for. Secondly as the market expects rates to embark on a tightening cycle, borrowers should be aware that the underlying rates could be raised at any time.

Won’t be around forever

The current offer from NAB is the best offer by any major Australian lender and though it is competitive for now, you should be aware that this offer is unlikely to be around forever. NAB can hike rates whenever it feels it is necessary and with RBA expected to raise rates over the course of the year and the cost of obtaining funding from the international bond markets rises, it is highly likely banks will raise variable rates up across all products instead of lowering them.

Playing the long game

Whilst a potential mortgage borrower may find this new offer attractive it is not necessarily the best in the market. Whilst the rate is competitive, you may well find the smaller lenders still offer lower interest rates over the life of a loan, particularly if a borrower is prepared to take out a home loan with an online provider.

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