Major bank drops mortgage rates

NAB has reduced its basic variable rates for owner-occupiers and investors with principal and interest (P&I) repayment terms.

For owner-occupiers:

• Loans with an LVR of 80 per cent or less have been reduced by 11 bps and now start from 3.09 per cent
• Loans with an LVR of more than 80 per cent have been reduced by 11 bps and now start from 3.29 per cent

Meanwhile, for investors:

• Loans with an LVR of 80 per cent or less have been reduced by 11 bps and now start from 3.39 per cent
• Loans with an LVR of more than 80 per cent have been reduced by 11 bps and now start from 3.59 per cent

In a statement following the announcement, a spokesperson noted that the changes take the bank’s basic variable rate to its “lowest level on record”.

“We are excited to further strengthen our competitive home loan offering, with these changes showing our ongoing commitment to support customers’ home ownership goals,” a NAB spokesperson said.

The bank added the changes would particularly assist first home buyers applying for the federal government’s First Home Loan Deposit Scheme, with NAB appointed as the first credit provider on the scheme’s panel last month.

Commenting on NAB’s changes, comparison service Canstar’s finance analyst, Steve Mickenbecker, said they were proof of strong competition in the marketplace.

 “The latest cuts made by NAB are further evidence of the competitiveness of the home loan market at the moment. We’re seeing all-time low rates, and this cut puts NAB’s base variable rate for owner-occupiers in the lowest price quarter of loans on Canstar’s database,” he said.

“It’s not just the small players who are being competitive – it’s the big four as well.”

[Related: Lender hikes rates to ‘improve processing times’]