NAB Cuts Rates Ahead of RBA, Offering Relief to Borrowers

By Robert Heyward

National Australia Bank (NAB) has pre-empted the Reserve Bank of Australia (RBA) by slashing its basic variable home loan rate by 40 basis points to 6.44%, marking its first cut in a year. The move could save new customers on a $500,000 loan approximately $126 per month and is likely to intensify competition in the home loan market as the holiday season approaches.

Competition Heats Up Among Lenders

The cut is seen as a strategic response to growing rivalry between banks, particularly as Commonwealth Bank (CBA) and ANZ increasingly offer low-rate, digital-only loans.

Rachel Wastell, a personal finance expert at Mozo, called the move “an early Christmas present” for new borrowers.

“NAB’s cut is substantial, equivalent to nearly two RBA cuts, and it’s refreshing to see a big four bank make this move without forcing borrowers into digital-only products,” she said.

Market Trends and Big Four Movements

Data from Canstar highlights a trend of rate cuts for new customers across the lending market, with 63 reductions recorded since July.

Among the big four banks:

• CBA reduced select new customer rates in August.
• NAB previously cut its Tailored Home Loan rate by 78 basis points in April.

NAB’s 6.44% rate is now the lowest branch-access variable rate among the big four, although ANZ (6.14%) and CBA (6.19%) offer lower rates exclusively through digital-only options for refinancing, not new customers.

Sally Tindall, Canstar’s data insights director, noted that while new customers benefit from these reductions, existing borrowers often feel left out.

“Existing NAB borrowers should use this as an opportunity to renegotiate. Jump online, compare rates, and ask for a cut. Many lenders currently offer variable rates under 6%,” she advised.

Potential Savings for Borrowers

For new customers, NAB’s rate cut offers tangible savings:

• $189/month on a $750,000 loan.
• $251/month on a $1 million loan.

Wastell encouraged existing borrowers to consider renegotiating their rates ahead of the holidays.

“This could provide the relief many buyers and homeowners need as we head into Christmas,” she said.

RBA Rate Cuts on the Horizon?

The RBA has held rates steady at 4.35% for nearly a year, but analysts predict cuts are on the way as inflation cools. Major banks, including CBA and NAB, expect a reduction as early as December 2024 or early 2025, potentially giving borrowers a further boost.

With NAB’s latest move shaking up the market, it remains to be seen how competitors will respond and whether the RBA will deliver rate cuts in the coming months. For borrowers, now may be the time to lock in better deals.

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