This article is from the Australian Property Journal archive
THE National Australia Bank has raised the stakes on Westpac by slashing its home loan rates by 142 basis points, as the major lenders continue their war to win over new customers.
NAB will cut the rate for new customers taking out a principal and interest owner occupier loan by 142 bps to 3.69%. This is only available through its broker network.
The bank also cut the loan the variable rate for new owner occupiers by 48 bps to 3.69%, which is not exclusive to the broker network.
This is the first time the NAB has cut rates since the banking royal commission started, where the commission heard that its bank managers across a number of Sydney branches allegedly took bribes to push through and approve fraudulent home loans.
And it is the second time this month NAB has reduced loan rates after cutting its five-year fixed rate loan by 50 bps to 4.09% and the two and three-year fixed investor interest-only loans by 30bps to 4.19%.
The 142 bps cut is the largest and dwarfs Westpac’s 105 bps discount announced last week, which was also Westpac’s second rate cut this month after its first reduction of only 14 bps was dwarfed by the Commonwealth Bank and ANZ’s 50 bps.
Westpac also launched a new introductory variable rate for first home buyers, slashing the rates by 80 bps a variable rate of a five-year loan to 3.79%.
RateCity’s Sally Tindall said the changes reflect the bank’s long-term outlook on the cash rate.
“The fixed rate war shows our big banks are not pricing in a rate hike anytime soon. “The series of cuts show competition has returned to the investor interest-only space. After reaching their caps imposed by APRA the big banks are opening up their books again,” she added.
AMP Capital’s chief economist Shane Oliver does not expect the Reserve Bank to start raising rates until 2019.
“…with wages growth and inflation likely to remain low for a while yet we have pushed out the expected timing for the first RBA rate hike from late this year into February next year.
“Average house prices have started to edge down, with fears of a deeper crash. But in the absence of a stronger supply surge, the RBA making a mistake and raising rates too high and/or unemployment surging, our view remains that price declines in Sydney and Melbourne will be limited to 5-10% and other cities face a more positive outlook.” Oliver said.
Australian Property Journal