NAB slashes more home loan rates to below 2%

author-avatar By on March 18, 2021
NAB slashes more home loan rates to below 2%

Another day, another home loan rate gets cut to under 2% p.a. This time it's big four bank NAB doing the cutting.

As of today (Thursday 18 March), NAB cut various fixedinvestment, interest-only and package home loans by up to 15 basis points. 

The lowest rate among the affected loans is 1.89% p.a (3.97% p.a. comparison rate*), belonging to the Choice Package Tailored Fixed loan for two years, paying principal and interest (P&I).

Another NAB loan cut to the sub 2% mark is the Tailored Fixed loan for two years (P&I), with an advertised rate of 1.99% p.a (4.20% p.a. comparison rate). 

Other rate cuts are as follows:

  • NAB Inv Tailored Fixed - IO in arrears 2 yrs: 10 basis point cut to 2.59% p.a (4.87% p.a. comparison rate*)
  • NAB Inv Tailored Fixed  - P&I 2yrs: 15 basis point cut to 2.39% p.a (4.75% p.a. comparison rate)
  • NAB Choice Package Inv Tailored Fixed - IO in arrears 2 yrs: 10 basis point cut to 2.49% p.a (4.60% p.a. comparison rate*)
  • NAB Choice Package Inv Tailored Fixed - P&I 2 yrs: 15 basis point cut to 2.29% p.a (4.51% p.a. comparison rate*)

The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

These cuts by NAB follow a plethora of recent rate cuts, many of which were made to two year fixed loans just as all the above are. 

In recent months, fellow big four banks Westpac and Commonwealth Bank had each cut at least one home loan rate to below 2% p.a - only ANZ is yet to do so

Westpac's was arguably the most notable, as it cut its fixed home loan rate for P&I, two-year fixed owner-occupied borrowers to what was the lowest interest rate on the market at the time

However the record was short lived, as just yesterday Homestar Finance knocked Westpac off its perch by cutting its owner-occupier fixed rate by 14 basis points to a market leading rate of 1.74% p.a. (2.23% p.a. comparison rate*). 

Homestar also boasts one of the lowest variable rates on the market at 1.79% p.a (1.84% p.a comparison rate), while Greater Bank has the lowest fixed-rate on the market overall with a one year fixed-rate of 1.69% p.a (3.49% p.a. comparison rate*), according to Savings.com.au's analysis. 

UBank has the lowest three-year fixed rate at 1.75% (2.22% p.a. comparison rate*), the market analysis also found. 

These ultra-low fixed rates have caused more borrowers to choose fixed over variable, with the likes of CommBank indicating that its fixed loan book grew 38% in the second half of 2020 compared to the first half.

However this could be set to change when the Reserve bank reshapes its 'term funding facility' (TFF) in June


 

Image source: NAB

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): Credit Union Australia, 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.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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