Big bank gets in on rate-cutting wave
On Thursday, NAB announced anyone willing to lock in their mortgage rate for one or two years can get a 0.25 per cent reduction on the previous rate. The bank has knocked 0.1 percentage points off the interest rate for three-to-five-year fixed mortgages.
NAB's reductions apply to investment properties as well.
The Reserve Bank shocked onlookers last month by keeping the cash rate on hold. The board meets again next week, and the sharemarket is betting it's more likely than not rates will be doubly slashed, from 3.85 per cent to 3.35 per cent.
A 0.25 point reduction saves someone $90 a month on repayments, if they are an owner-occupier, paying principal and interest, with a $600,000 debt and 25 years left on the loan. A mortgage holder owing $1m would save $150-a-month with a quarter-point cut.
A host of smaller lenders moved quicker than the big four in cutting rate offers. Multiple lenders outside the big four have their lowest offerings at 4.94 per cent for two and three years.
'While an RBA cut looks to be a near-certainty, if you've got a mortgage, don't bank on any extra cash until it lands in your bank account,' Canstar data insights director Sally Tindall Tindall said this week.
'The RBA has shown it doesn't dance to the beat of market expectations – it's the one steering the ship.
'Banks are also at the helm of your mortgage and while we expect the big banks to step up to the plate and pass the next cut on in full, there's no guarantee every lender will do this.'
Australia's big four banks – ANZ, Commonwealth, NAB and Westpac – are all tipping a 0.25 point cut from the RBA next week.
The Australian sharemarket indicates a 51 per cent chance the RBA will make a 0.5 point cut.
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