RBA March hike kicks in across Australia, NAB scraps its package home loan

Australians with a Commonwealth Bank of Australia, NAB or ANZ variable home loan will see their interest rate rise by 0.25% today as the RBA’s March hike takes effect.

Westpac variable mortgage customers will see their rates rise on Tuesday (21 March).

The average owner-occupier with a $500,000 debt at the start of the hikes and 25 years remaining will now see their repayments rise to $3,318 – that’s a $983 increase (42%) since May of last year.

While borrowers will be charged the higher rate of interest from today, for many customers, the extra money will only start coming out of their bank accounts from May.

Big four banks lowest variable rates – post March RBA

Source: RateCity.com.au. Based on an owner-occupier paying principal and interest. LVR requirements apply. Westpac rate effective 21 March. CBA’s lowest rate is a package home loan with a $395 annual fee.

NAB permanently retires its package loan

Australia’s third largest lender, NAB, has today officially retired its discounted variable rate, or ‘package’ loan for new customers, which previously came with an offset account for an annual fee of $395. 

New customers who want access to an offset will have to take out the bank’s standard variable rate loan. However, NAB has lowered the rate on this loan and included a discount for mortgages with deposits of 30% or more (loan-to-value ratio of 70% or less).

Instead of the annual fee, customers will pay a monthly fee of $8 ($96 a year).

NAB Tailored Home Loan – new rates for owner-occupiers paying principal and interest

Source: RateCity.com.au.

This move follows a similar decision from ANZ to retire its package home loan in March 2022 and introduce a $10 a month fee ($120 per year) for customers wanting an offset account. CBA and Westpac still offer package loans.

Savings rates also on the rise

While some big banks were slow to announce their full suite of savings increases, the big four have today hiked all of their key savings accounts by 0.25 percentage points with two exceptions:

• CBA increased its GoalSaver by just 0.15% points.
• Westpac increased its young adult account, Spend&Save by 0.35% points.

Big four bank key savings rates post March RBA

Source: RateCity.com.au. Note: conditions may apply for maximum rate.

RateCity.com.au research director, Sally Tindall, said: “Customers wondering how on earth they’re going to make this next leap in monthly repayments should start looking at their options.” 

“While many banks will be charging these higher rates from today, lenders typically give their customers one month’s notice before taking the extra money out of their account,” she said.

“If you don’t think you can make the higher repayments, use this time to look at alternatives, whether that’s refinancing, haggling with your existing bank for a rate cut or moving temporarily to part payments.

“While part payments can give borrowers some financial breathing space in the short term, it can become a costly exercise in the longer term and should be avoided if possible.

“If you have to go down this path, make sure your bank gives you relief in the form of a rate cut as well. 

“There is no reason existing customers struggling to pay the bills should have to pay a higher rate of interest than a new customer. Any bank that seeks to do this to someone in financial distress should look inward at their decision making. 

“Owner-occupiers looking to refinance may still be able to get a rate that’s a fraction below 5%, although these loans are becoming increasingly difficult to find. 

“While the banks are now starting to play ball when it comes to savers, what ultimately matters is the rate you’re getting on an ongoing basis. 

“With two banks now offering savings rates of 5% or more to select customers, it could be time to reassess your savings strategy,” she said. 

Resources for people in financial stress

1. National Debt Helpline: 1800 007 007
2. Good Shepherd no interest loans
3. Services Australia Payment and Service Finder

State-based resources:

1. Service NSW Savings Finder
2. Service Victoria Savings Finder
3. Queensland Govt Concessions Finder
4. SA Govt Concessions Finder
5. Concessions WA
6. Concessions NT
7. Tasmanian Govt Discounts and Concessions
8. ACT Savings Finder

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