Competition in the variable home loan space is heating up, as NAB today trims its base variable rate by 0.10% - but only for new owner-occupiers, according to the financial comparison website RateCity.
NAB's lowest variable rate is now 2.19%, aligning with big four bank competitors, Westpac, and ANZ. However, NAB offers this rate for customers with 20% deposits, unlike Westpac and ANZ, which require 30% or bigger deposits.
Interestingly, while dropping its variable rate, NAB increased its fixed rates for the sixth time in six months, noted RateCity. The bank raised its fixed rates by up to 0.50% for owner-occupiers and investors. Following these changes, NAB has only one fixed rate under 3%, at 2.74% for one year.
Financial specialist Craig Betalli, a Senior Finance Specialist at Our Broker, said "Until the latest cycle, the lenders used historically low fixed rates as the competitive battleground. Now, as the fixed rates have increased, they have decided to offer lower variable rates as a means of attracting greater market share."
According to Craig, it's a classic case of robbing Peter to pay Paul. "It seems that the lenders are using some of the profits from their fixed rate hikes to offer these discounted variable rates," he said.
RateCity.com.au research director, Sally Tindall, agreed, "While fixed rates are rising rapidly, there is still plenty of competition in the variable home loan market."
She continued, "NAB has bowed to the pressure and cut its basic variable rate to match its big bank competitors Westpac and ANZ," she said.
"Despite no change from the RBA, we've seen the average big four bank's basic variable rate drop by 0.35% in the last year, but only for new customers.
"For anyone on a variable rate, now is the time to haggle with your lender before the predicted RBA rate hikes begin," she said.
Craig Betalli added, "While the Reserve Bank hasn't touched rates for 17 months, homeowners might be able to give themselves a rate cut by shifting lenders to grab one of the lower variable rates with the assistance of a finance specialist such as Our Broker.