Effective from Monday (12 December 2016), NAB’s Variable Rate for Residential Investment Home Loans will rise to 5.55 per cent per annum.
NAB will also increase the variable rate for NAB Homeplus Residential Investment Home Loans, available through NAB Broker, by 0.15 per cent to 5.58 per cent per annum.
However, there will be no change to NAB's Variable Rate for Home Loans (Standard Variable Rate) for owner occupier customers, which will remain at 5.25 per cent.
NAB chief operating officer, Antony Cahill, said that the decision has been made to ensure NAB “continues to lend responsibly and sustainably to all customers”.
Mr Cahill said: “We don’t make these decisions lightly, and these changes reflect the increasingly challenging environment we are currently operating in as we seek to meet the needs of all our customers and our shareholders.
“As was evident during the recent bank reporting season, net interest margins – the difference between what we pay to borrow funds to lend to our customers and what our customers pay – are down, particularly in home lending, and they remain under pressure.
“A low-rate environment poses considerable challenges to all lenders, and we must respond to what is happening in the economy and the market. In doing so, we have to consider a range of factors including the ongoing need to hold longer-term stable sources of funding, continued elevated funding costs, regulatory requirements, and the competitive pressures at play.”
According to Mr Cahill, the bank will continue to “regularly review” its products and pricing to ensure a balance for all stakeholders; borrowers, depositors, investors and shareholders.
The announcement comes following changes to the way NAB prices its home loans based on loan purpose and repayment type.
“We can now be more specific in how we manage our entire home lending portfolio in line with economic conditions and regulatory requirements,” Mr Cahill said.
Adding that the investor segment continues to be important to NAB, and that interest rates for all home buyers are around their lowest levels in more than 50 years, the COO stated: “NAB is committed to providing customers with great value and service, and home loan products that suit their needs at a competitive price.
“Switching to a fixed rate loan is a straightforward and easy process, and I encourage borrowers to speak with their banker or broker to find out more about what’s available, and if a fixed rate home loan might be right for their circumstances.”
From Monday 12 December 2016, NAB’s advertised indicator rates for home lending will include:
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.