CBA and NAB hike select rates out-of-cycle for new customers

Australia’s largest and third largest lenders have today hiked select rates for new customers, as the rising rate environment forces banks to reassess their home loan offerings.

CBA has today increased the variable rate on its no-frills home loan for new owner-occupiers and investors with deposits of 30 per cent or more.

The bank has also hiked its 1- to 3-year fixed rates for owner-occupiers and investors.

Today’s CBA new customer rate changes – for owner-occupiers paying principal and interest 

Source: RateCity.com.au. Note: above fixed rates are for borrowers taking out a package home loan with a $395 annual fee.

Australia’s third largest lender, NAB, has also today increased its basic variable home loan for new customers. However, in contrast to CBA, NAB has only lifted the rate for loans with smaller deposits of 20 per cent or less.

The rates for new customers with bigger deposits remain the same.

Today’s NAB new customer rate change – for owner-occupiers paying principal and interest

Source: RateCity.com.au.

How do the big four banks now stack up?

Westpac continues to offer the lowest advertised variable rate loan for new customers at 4.89 per cent, but owner-occupiers will need a deposit of 30 per cent or more (LVR of 70% or less) to qualify for this rate. This includes a 0.40 percentage point discount, which expires after the first two years.

Big four banks basic variable home loans – for owner-occupiers paying principal and interest

Source: RateCity.com.au.

RateCity.com.au research director, Sally Tindall, said: “CBA’s fixed rate increases are no surprise. Cost of funding pressures, combined with a now widespread expectation there will be three more cash rate hikes in as many months, are likely to have triggered this rise.”

“Today’s increase to the bank’s lowest no-frills home loan is unexpected, however, the bank still has competitive advertised rates for borrowers looking for an offset account,” she said.

“CBA isn’t walking away from competition in the variable home loan space. The bank is just pushing customers in a different direction.

“The bank might have increased its basic home loan to rates from 5.22 per cent, yet it’s still offering deals as low as 5.07 per cent for people looking for an offset account, although it does come with a $395 annual fee.

“NAB’s increase to its basic variable rate for borrowers with deposits of less than 20 per cent are a blow for would-be buyers looking to take out one of these loans.

“All four big banks charge customers with small deposits higher rates because they’re seen as riskier borrowers, however, the difference even within the big four is stark.

“Borrowers with smaller deposits would do well to shop around.

“While most banks sting low deposit customers with higher interest charges, there are still a handful of lenders offering rates under 5 per cent for those with little equity,” she said.

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