National Australia Bank has cut interest rates on its four-year fixed mortgages to the lowest in 20 years, stepping up competition against rival lenders.
Amid fierce competition in the home loan market, NAB shaved 0.2 of a percentage point off its four-year fixed mortgages to 5.44 per cent. It also cut five basis points off its three-year fixed rate to 5.14 per cent.
NAB boasted it now has the lowest one, two, three and four-year rates of the big four banks.
“We know that now is the time people are looking to get their finances in order as they plan for the year ahead, especially those looking to buy their first home,” NAB group executive of personal banking Gavin Slater said in a statement.
“For people looking for a fixed-rate home loan, our four-year rate is the lowest it has been in more than 20 years and we are also offering great value across the one, two and three-year terms.”
NAB’s move is against the prevailing trend for fixed-rate mortgages. Lenders have been lifting fixed rates in recent months in a move experts believe is a sign the next shift in official rates by the Reserve Bank of Australia will be up.
Westpac subsidiaries St George Bank, Bank of Melbourne and Bank SA increased rates on three-year fixed loans by 0.14 of a percentage point earlier this month.
In October and November, ANZ, Commonwealth Bank of Australia, Westpac and NAB’s Homeside group increased rates on three-year fixed loans by 0.2 percentage points, according to data compiled by home loan broker Mortgage Choice.
Fixed rates are not directly linked to the RBA’s official cash rate decision in the same way as variable home loan rates.
However, movements in fixed rates are often seen as a strong pointer as to where the RBA is heading as lenders price them based partly on where they believe official rates will move.
While some economists believe the RBA will lower the cash rate further this year, stronger economic indicators in recent months have convinced many the rate-cutting cycle is over.