National Australia Bank (NAB) has made waves in the mortgage market with its significant interest rate cuts, stealing the spotlight this week. As the third-largest home lender in Australia, NAB’s bold move on Monday morning saw reductions of over 1% on its Tailored Variable home loans, attracting attention across the industry.

The new rates signal a competitive edge for NAB, with Tailored Variable owner-occupier loans seeing a substantial drop of 78 basis points, while investment loans experienced an even more significant reduction of 1.08%. This positions NAB’s lowest advertised rate for new owner-occupier principal and interest loans at 6.79% p.a. for loan-to-value ratios (LVR) ranging from ≤60% to 70%.

NAB’s New Tailored Variable Owner-Occupier Rates:

Loan type	LVR	Change (%)	New rate	Comparison rate*
P&I	≤60%	-0.78	6.79% p.a.	6.87% p.a.*
P&I	60-70%	-0.78	6.79% p.a.	6.87% p.a.*
P&I	70-80%	-0.78	6.99% p.a.	7.07% p.a.*
P&I	80-90%	-0.78	6.99% p.a.	7.07% p.a.*
Interest Only (IO)	≤60%	-0.78	7.26% p.a.	7.07% p.a.*
IO	60-70%	-0.78	7.26% p.a.	7.07% p.a.*
IO	70-80%	-0.78	7.46% p.a.	7.27% p.a.*
IO	80-90%	-0.78	7.46% p.a.	7.27% p.a.*

Despite these cuts, NAB’s Base Variable home loan for principal and interest remains unchanged at 6.84% p.a.

The reasoning behind NAB’s decisive rate adjustment suggests a strategic move to align their advertised rates more closely with the rates borrowers are actually securing, as indicated by recent market trends. While the big four banks continue to dominate the market, attracting 61.7% of home lending in the third quarter of the financial year, discounted rates are increasingly favored by borrowers, driving refinancing activity.

In light of NAB’s bold maneuver, attention has shifted from smaller lenders who had previously been making incremental adjustments to their variable rates. However, Homestar Finance has since announced noteworthy rate cuts of up to 26 basis points to its Star home loan products, further intensifying competition in the mortgage market.

As the landscape of home lending continues to evolve, borrowers are presented with a myriad of options. Whether navigating the offerings of major banks or exploring opportunities with smaller lenders, the key remains securing a loan that aligns with individual financial goals and circumstances.

Stay informed as the mortgage market unfolds, and consider how NAB’s rate adjustments and subsequent industry responses may impact your borrowing decisions.

For expert guidance tailored to your needs, contact us at Vantage Financial today.