Home loan rates seesaw: AMP hikes & NAB cuts

6 March 2019

Co-author: Ellie McLachlan

AMP Bank will lift interest rates across its variable home loans for existing and new borrowers, while National Australia Bank has announced a number of rate cuts.
AMP Bank
Source: TK Kurikawa (Shutterstock)

AMP says it will increase variable rates by 0.15 percentage points for investment and owner-occupier home loans to offset funding costs. The changes will kick in for new borrowers on Friday and for existing customers on Monday.

It will also decrease some of its fixed rates for its owner-occupied and investment package home loans from Friday.

Meanwhile, National Australia Bank will cut interest rates across some of its fixed rate home loans for owner-occupiers and investors from Thursday.

Canstar Group Executive of Financial Services Steve Mickenbecker said interest rate decreases outnumbered increases by 2 to 1 in February.

“Most of the interest rate changes we have seen lately have been reduced rates for new borrowers and increased variable rates for existing customers,” Mr Mickenbecker said.

“What makes AMP different is that it is lifting rates for new and existing customers.”

Mr Mickenbecker said wholesale funding costs have eased recently, but this didn’t mean lenders were not up against high costs because it depended on when the lender had borrowed the funds.

“If they raised the money two or three months ago then they would be up for increasing costs, but if they raised it today, the rates are a bit more favourable,” he said.

“But most lenders have felt some pressure on their margins and have felt a need to increase some interest rates and if they cut rates for new customers only, it’s typically so they can stay competitive in the market.”

AMP’s changes will apply across its variable home loan products and will see its standard reference rate rise from 5.28% to 5.43% and its standard reference interest-only rate lift from 5.75% to 5.90%.

The bank’s cuts to fixed lending rates include:

  • 3-year Basic Package investment principal and interest, from 4.87% to 3.99% (comparison rate of 4.43%)
  • 5-year Basic Package and Professional Package owner-occupied principal and interest, from 4.93% to 4.06% (comparison rate of 4.23% & 4.71%, respectively)
  • 3-year Professional Package investment principal and interest, from 4.12% to 3.99% (comparison rate of 5.30%)

AMP made interest rate cuts as deep as 0.20 percentage points to a number of its investment property loans in January.

Meanwhile, NAB will drop its three-year fixed home loan rate by 0.10 percentage points to 3.99% (comparison rate 5.12%) for owner-occupiers paying principal and interest, while its five-year fixed loan will decrease by 0.05 percentage points to 4.29% (comparison rate 5.04%).

Some of the biggest cuts for owner-occupiers applies to some of NAB’s packaged fixed rate home loans for private customers.

According to the bank’s website, to be a NAB Private customer you need an annual income of at least $400,000 and investable assets of $1 million outside the family home.

In late January, NAB hiked the interest rates on a number of its variable home loans due to market pressures and the impact of increasing borrowing costs.

It said the rate rises would not apply to its fixed home loan rates.

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