National Australia Bank (NAB) has announced that it has cut some investor home loan rates by 30 bps.
The bank said that from Friday (28 May), the investor base variable rate (BVR) for a principal and interest loan was reduced to 2.79 per cent per annum (2.79 per cent per annum comparison rate), while the BVR for an interest-only investor loan has been reduced to 2.99 per cent per annum (3.60 per cent per annum comparison rate).
Both rates are applicable to new loans only with a loan-to-value ratio (LVR) of over 80 per cent, the major bank said.
The reduction in interest rates for NAB investor loans has come amid recent data that showed that investor activity has increased recently after declining last year.
For example, March 2021 figures from the Australian Bureau of Statistics (ABS) revealed that new loan commitments for housing rose to a new record high of $30.2 billion (seasonally adjusted) in March.
The ABS attributed this rise to investor loan commitments, which it said accounted for more than half of the increase. Loans rose by 12.7 per cent to $7.8 billion in March (seasonally adjusted) and was 54.3 per cent higher than in March 2020.
There has been a period of upward trend in investor lending since May 2020 when lending in this segment reached a 20-year low, the ABS said.
Figures from the Australian Prudential Regulation Authority (APRA) revealed that in March 2021, investor lending grew by 0.2 per cent ($1.6 billion), up from the 0.1 per cent ($800 million) rise in February.
Commenting on NAB’s interest rate reduction for investor lending, NAB executive, home ownership, Andy Kerr told Mortgage Business that this is the lender’s lowest advertised variable rates for property investors.
“The health and financial shock of the pandemic drove a decline in investor interest last year. However, this year we have seen the return of investors as economic conditions have improved,” he said.
“We also know price is just one factor when getting a home loan and continue to simplify and improve the home lending experience for all our customers.”
Mr Kerr added that NAB has reverted to pre-COVID-19 policies for investors.
“We expect brokers will shortly see the benefits of significant changes we’re making to simplify and speed up the time it takes for approval,” he said.
NAB hikes fixed rates amid rising funding costs
Earlier this month, NAB announced increases to its four-year and five-year fixed rates for new owner-occupier principal and interest home loans of between 20 bps and 25 bps.
The four-year fixed rate for NAB’s Tailored Home Loan package increased by 21 bps to 2.29 per cent per annum (3.91 per cent per annum comparison rate) while the five-year rate increased by 25 bps to 2.59 per cent per annum (3.88 per cent per annum comparison rate).
Rates for owner-occupier borrowers on the Choice package (principal and interest) are 10 bps lower, with the four-year rate at 2.19 per cent per annum (3.76 per cent per annum comparison rate) and 2.49 per cent per annum (3.76 per cent per annum comparison rate).
Commenting on the fixed rate increases, a NAB spokesperson told Mortgage Business: “Funding costs for longer-dated loans have increased this year. The sustained increase in costs led us to make a change to our four and five-year fixed home loan rates.
“These changes do not impact the rates of our existing customers.”
The spokesperson added that the major bank’s two-year and three-year fixed rate products have remained at “historic lows” of below 2 per cent.
Earlier this year, NAB cut 55 bps from its five-year Choice package fixed rate for owner-occupiers paying principal and interest, and 11 bps to its three-year fixed rates under the same package.
Meanwhile, Citi recently announced that it had lowered its variable interest rates as well as its one-year and two-year fixed rates.
[Related: NAB slashes fixed home loan rates]
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.