Citi raises home loan interest rates, NAB lowers

Photo by Scott Webb on Unsplash

While most mortgage lenders might have dropped their interest rates lately, one lender has bucked that trend by increasing some of its rates.

Non-major bank Citi has increased variable and fixed, residential and investment interest rates by up to 0.25 basis points, while NAB has dropped some of its special home loan interest rates. 

The changes from Citi are effective for new loans submitted from 4 December 2019, and apply to the following loans:

For owner-occupiers:

• variable rates now start from 3.06% p.a. (3.11% p.a. comparison rate), an increase of 23 basis points 
• fixed rates now start from 2.89% p.a. (3.50% p.a. comparison rate), an increase of 25 basis points 

For investors:

• variable rates now start from 3.29% p.a. (3.34% p.a. comparison rate), an increase of up to 10 basis points, and; 
• fixed rates now start from 3.09% p.a. (3.69% p.a. comparison rate), an increase of up to 25 basis points

Looking for a low variable rate home loan? The table below displays owner-occupier products which may represent the best of the big four banks, best of the top 10 customer-owned banks and the best of the larger non-banks.

It's unusual to see interest rate increases at the moment. While there was no Christmas rate cut this week, most lenders have been steadily dropping rates since the first Reserve Bank rate cut in June. 

In a statement sent to Savings.com.au, Citi said this change was made to "improve processing efficiencies". 

"During the Spring peak period, Citi offered 2.96% for Owner Occupiers, and is now moving to 3.19%," Citi said. 

"This change does not impact existing customers or customers who applied prior to December 4."

According to Citi, the 2.96% p.a. offer for owner occupiers was "the most competitive in market", although there are currently still rates lower than this. 

Citi said it saw mortgage application volumes triple as a result. 

"As a result, processing times were pushed out, causing delays for customers waiting for financing approval for their home loans."

"To avoid this situation, Citi made the decision to raise rates to allow the business time to ensure completion of existing applications, improve our processing times, and give a better customer experience, while still offering a competitive rate."

NAB cuts special offer rates

NAB was the only big four bank to cut home loan rates this week, and indeed over the last few weeks as the big four remain relatively quiet heading into the new year. 

NAB's special offer home loan rate - a low rate given exclusively to customers who deposit 20% or more of the property's value - has been cut by 11 basis points across both residential and investment variable home loans. 

For owner-occupiers:

• Base variable rate P&I (LVR below 80%) now starts from 3.09% p.a. (3.09% p.a. comparison rate), down from 3.20% p.a. 
• Base variable rate P&I (LVR above 80%) now starts from 3.29% p.a. (3.29% p.a. comparison rate), down from 3.40% p.a.

For investors:

• Base variable rate P&I (LVR below 80%) now starts from 3.39% p.a. (3.39% p.a. comparison rate), down from 3.50% p.a. 
• Base variable rate P&I (LVR above 80%) now starts from 3.59% p.a. (3.59% p.a. comparison rate), down from 3.70% p.a.

NAB was also chosen last week as the first of two major lenders to offer mortgages under the Federal Government’s First Home Loan Deposit Scheme, while it also recently announced a cashback bonus of up to $4,000 for refinances and $2,000 for new purchases From January 1. 

"We are excited to further strengthen our competitive home loan offering, with these changes showing our ongoing commitment to support customers’ home ownership goals," NAB Executive General Manager Leigh O'Neil told Savings.com.au.

"The $4,000 cash bonus on refinancing is NAB’s highest ever cash bonus offer and with rates at record lows, now is the perfect time for Australians to look at refinancing their loan.

"The rate change to our Base Variable Rate product takes it to its lowest level on record and for customers looking to buy a new home, can be combined with the $2,000 cash bonus and application fee waiver."

TicToc drops variable and fixed rates

Smaller online lender TicToc yesterday cut various home loan interest rates by up to 10 basis points, applying to both investment and owner-occupier loans for fixed and variable rates. 

The 10 basis points applies only to investment, interest-only (IO) loans.

For owner-occupiers:

• Live-in variable P&I rate cut by 5 basis points to 2.79% p.a. (2.80% p.a. comparison rate).

For investors:

• Variable P&I rate cut by 5 basis points to 3.15% p.a. (3.16% p.a. comparison rate). 
• Fixed P&I 1 year rate cut by 5 basis points to 2.89% p.a. (3.14% p.a. comparison rate)
• Fixed P&I 2 year rate cut by 5 basis points to 2.89% p.a. (3.11% p.a. comparison rate
• Fixed P&I 3 year rate cut by 5 basis points to 2.89% p.a (3.09% p.a. comparison rate) 
• Fixed IO 1 year rate cut by 10 basis points to 2.99% p.a. (3.14% p.a. comparison rate)
• Fixed IO 2 year rate cut by 10 basis points to 2.99% p.a. (3.13% p.a. comparison rate)
• Fixed IO 3 year rate cut by 10 basis points to 2.99% p.a (3.12% p.a. comparison rate) 

UniBank, Teachers Mutual Bank slash fixed rates 

UniBank and Teachers Mutual Bank, two related companies, have both cut their fixed investment and owner-occupier rates by as much as 102 basis points, with a few increases.

The changes seen below apply to both lenders: 

For owner-occupiers: 

• Fixed rate 2 year P&I increased by 10 basis points to 2.98% p.a. (4.36% p.a. comparison rate)
• Fixed rate 3 year P&I cut by 30 basis points to 2.98% p.a. (4.23% p.a. comparison rate)
• Fixed rate 4 year P&I cut by 51 basis points to 3.28% p.a. (4.21% p.a. comparison rate) 
• Fixed rate 5 year P&I cut by 51 basis points to 3.28% p.a. (4.11% p.a. comparison rate) 
• Standard fixed rate 1 year IO cut by 74 basis points to 3.45% p.a. (4.70% p.a. comparison rate)
• Standard fixed rate 2 year IO cut by 64 basis points to 3.45% p.a. (4.59% p.a. comparison rate)
• Standard fixed rate 3 year IO cut by 54 basis points to 3.45% p.a. (4.48% p.a. comparison rate)
• Standard fixed rate 5 year IO cut by 75 basis points to 3.75% p.a. (4.42% p.a. comparison rate)

For investors:

• Fixed rate 1 year P&I cut by 10 basis points to 3.28% p.a. (4.68% p.a. comparison rate)
• Fixed rate 3 year P&I cut by 7 basis points to 3.28% p.a. (4.43% p.a. comparison rate) 
• Fixed rate 4 year P&I cut by 37 basis points to 3.68% p.a. (4.34% p.a. comparison rate)
• Fixed rate 5 year P&I cut by 37 basis points to 3.68% p.a. (4.28% p.a. comparison rate) 
• Fixed rate 1 year IO cut by 102 basis points to 3.47% p.a. (4.70% p.a. comparison rate)
• Fixed rate 2 year IO cut by 101 basis points to 3.47% p.a. (4.59% p.a. comparison rate)
• Fixed rate 3 year IO cut by 52 basis points to 3.47% p.a. (4.48% p.a. comparison rate) 
• Fixed rate 5 year IO cut by 101 basis points to 3.78% p.a. (4.42% p.a. comparison rate) 

Other key changes

Large lenders Suncorp and AMP have decreased packaged investment and owner-occupier loans by up to 20 and 15 basis points respectively. Sydney Mutual Bank cut many different home loan products by as much as 95 basis points, with the largest change applying to fixed products. 

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Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

• The big four banks are: ANZ, CBA, NAB and Westpac
• The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
• The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
• If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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