Millions of variable borrowers across the country have had their rate increased today as big banks CBA, Westpac, NAB and ANZ pass on last Tuesday’s 0.25 percentage point rate hike.
Westpac still offers the lowest advertised variable rate out of the majors at 5.99% p.a., with CBA close behind at 6.09% p.a. Both of these owner-occupier variable rates are for new customers who apply online.
NAB has changed the pricing structure on its Tailored Home Loan. Looking at the lowest rate-option for an owner-occupier with a 30% deposit, the rate now ranges from 6.09% p.a. to 6.79% p.a.
In a further move towards risk-based pricing, the bank says a customer’s specific rate will depend on, but is not limited to: “your banking history with NAB, information provided in your application, your credit risk and your credit history. This rate could change and may be different on the day of settlement”.
Big four banks’ lowest | |
|---|---|
CBA | 6.09% p.a. |
Westpac | 5.99% p.a. |
NAB | 6.09% - 6.79% p.a. |
ANZ | 6.25% p.a. |
Source: Canstar. Rates are for owner-occupiers paying principal and interest. LVR requirements apply. CBA, Westpac and ANZ customers must apply online for the lowest rate. NAB rate range is an estimate only.
What does a decent rate look like now?
Canstar’s RBA rate tracker shows 36 banks have now passed on the May rate hike to their variable borrowers, while 34 have announced but not yet implemented their rate changes for existing customers.
- 6.26% p.a. will be the average owner-occupier variable rate once all the lenders pass on the May rise.
- 5.99% p.a. will be a competitive variable rate, expected to be offered from around 40 lenders.
- 5.69% p.a. is the lowest variable rate on Canstar of those lenders that have announced their May rate increase.
Canstar's Data Insights Director, Sally Tindall, says, “Today’s rate hikes are another hit to household budgets, particularly for borrowers who’ve already stretched themselves to keep up with higher living costs since the start of the year.”
“For a household with a $600,000 mortgage and 25 years remaining, this latest hike could add roughly another $91 a month to repayments. In total, across what is now three hikes, the monthly increase is an estimated $272, with more hikes potentially waiting in the wings.
“Three of the four big banks are now firmly back above the 6 per cent mark for most new variable borrowers, with Westpac hanging on with one fingernail to an advertised rate that starts with a '5'.
“After this rate cut has been passed on by all lenders, there are likely to be more than 40 different providers on the Canstar database offering at least one variable rate under the 6 per cent mark, however, you’re likely to have to switch banks to secure one.
“NAB’s move to an advertised rate range is a shift in how home loans are being priced. It’s another sign banks are increasingly tailoring rates to individual borrowers, rather than relying on a one-size-fits-all approach.
“For borrowers, that means two people applying for the same loan could end up with quite different rates depending on their credit history, deposit size and broader banking relationship.
“If you’ve got a mortgage with NAB as an owner-occupier and you’re now paying a rate that’s over 6.09 per cent, use this new rate range to your advantage. Pick up the phone, point out the lower rate, and see if you can get yourself a personalised rate cut.”
