NAB announces fixed rate interest rise for some of its borrowers


NAB has announced plans to hike up its fixed interest rates by as much as 0.6 percentage points for some of its borrowers.

The major bank will increase the rate for owner-occupiers and investors who take out a new NAB Choice Package or Tailored Home Loan. 

Homeowners taking on a one-year fixed rate on an National Australia Bank Choice Package will be hit the hardest with an increase of 0.6 percentage points. 

Rates will be increased by 0.3 percentage points for customers on a two-year fixed rate and 0.55 percentage points for three-year fixed rates and 0.4 percentage points for four-year fixed rates.

NAB has announced plans to hike up its fixed interest rate as much as 0.6 percentage points for some of its borrowers

The major bank will increase the rate for owner-occupiers and investors who take out a new NAB Choice Package or Tailored Home Loan (stock image)

The major bank will increase the rate for owner-occupiers and investors who take out a new NAB Choice Package or Tailored Home Loan (stock image)

Investors will experience an increase of 0.4 percentage points on a one and two-year fixed rate, a 0.55 percentage point uptick on a three, four or five year fixed rate.

RateCity.com.au research director Sally Tindall said NAB was among the growing list of lenders to increase fixed rates.

‘Fixed rate hikes are still coming thick and fast as the cost of funding continues to put pressure on the banks’ bottom line,’ she said.

‘In the last month alone, we have seen 90 lenders hike fixed rates, including NAB, which has now increased its rates twice in July.’

The adjustment comes as the major banks increase their fixed rates and trim their variable rates in an effort to entice new customers.

Nine lenders have cut variable rates over the last three months with Commonwealth Bank of Australia cutting its lowest variable rate for new customers by 0.15 percentage points. 

Macquarie Bank cut their variable rates by 0.25 percentage points, and ING and ME Bank by 0.15 percentage points.

Historic inflation levels 

JUNE 2022: 6.1 per cent

MARCH 2022: 5.1 per cent

JUNE 2001: 6.1 per cent

DECEMBER 1990: 6.9 per cent

JUNE 1990: 7.7 per cent

MARCH 1990: 8.7 per cent

JUNE 1987: 9.3 per cent

Source: Australian Bureau of Statistics annual consumer price index data released quarterly 

The big banks raise their fixed rates in anticipation of the future market price for the Reserve Bank of Australia cash rate.

Last year, the big banks were still offering two per cent fixed mortgage rates when the cash rate was still at a record-low of 0.1 per cent and RBA governor Philip Lowe was promising no rate rise until 2024 ‘at the earliest’.

The Australian Securities Exchange’s 30-day interbank cash futures market is predicting a 3.4 per cent cash rate by March 2024.

This is even higher than Westpac’s prediction of a 3.35 per cent cash rate by February, which would be the highest since October 2012.

ANZ is expecting the cash rate to rise from an existing three-year high of 1.35 per cent to a 10-year high of 3.35 per cent by November, with 50 basis point rate rises in August, September, October and Melbourne Cup Day.

NAB is forecasting a 2.85 per cent cash rate by November while the Commonwealth Bank sees as a 2.6 per cent cash rate by that month.

Treasury is expecting inflation to climb to 7.75 per cent by the end of this year, which would be the highest since the March quarter of 1990.

Nine lenders have cut variable rates over the last three months with Commonwealth Bank of Australia cutting its lowest variable rate for new customers by 0.15 per cent (stock image)

Nine lenders have cut variable rates over the last three months with Commonwealth Bank of Australia cutting its lowest variable rate for new customers by 0.15 per cent (stock image)

Headline inflation in the year to June surged by 6.1 per cent, the steepest pace since mid-2001 as petrol prices again climbed above $2 a litre.

When the one-off effect of the GST’s introduction was excluded, this was the highest consumer price index in 32 years.

RBA rate rises in May, June and July of 1.25 percentage points have already been the most severe since 1994.

Australia’s inflation rates have surged by 6.1 per cent for the first time in two decades stirring fears of a super-sized interest rate rise in August. 

The consumer price index in the June quarter soared at the steepest pace since mid-2001, after unemployment last month fell to a 48-year low of 3.5 per cent.

But when the one-off effect of the GST introduction was excluded, Australia’s CPI was the highest since the December quarter of 1990, during the first Gulf War.

Treasurer Jim Chalmers said ‘these are confronting numbers’ with mortgage rates set to keep increasing.

‘It will get tougher before it starts to ease,’ he said.

‘It’s going to be a difficult time ahead. We expect it to get higher.’ 

Headline inflation is now well above the Reserve Bank of Australia’s two to three per cent target, with the latest reading marking a sharp rise from the March quarter’s 5.1 per cent pace when petrol prices climbed above $2 a litre.  

What the big banks are predicting 

WESTPAC: 3.35 per cent cash rate by February 2023

This would include 50 basis point increases in August and September and 25 basis point rises in October, November, December and February

ANZ: 3.35 per cent cash rate by November 2022

This would include 50 basis point increases in August, September, October and November

COMMONWEALTH BANK: 2.6 per cent cash rate by November

This would include 50 basis point rate rises in August and September and a 25 basis point rise in November

NAB: 2.85 per cent cash rate by November

This would include 50 basis point increases in August and September and 25 basis point rises in October and November

Source: RateCity 

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