Time to read : 2 Minutes
Two of Australia’s largest banks aren’t waiting for Tuesday’s interest rate decision and have decided to raise their home loan rates early.
Key points:
The Commonwealth Bank and NAB have jumped the gun on the RBA's cash rate announcement and raised their new home loan rates.
Rates are effective immediately for any new applications and also for loan applications in progress for the Commonwealth Bank.
Rates apply for loans with a 30 per cent deposit at CommBank and 20% or less deposit for NAB clients.
CommBank (CBA) and NAB announced this week they would be lifting select rates for new customers ahead of the RBA’s monthly announcement of the cash rate on Tuesday. It is anticipated the RBA will raise the cash rate again despite raising it a further 25 basis points last month to 3.35%.
Compare Cub home loan expert Sophie Matthews said the banks' actions were ‘protection’ tactics.
“CommBank and NAB have announced that they are looking to lift select rates for new customers and essentially jumped the gun to get ahead of the rate rise,” Ms Matthews says.
“There is no reason why the banks are doing this, other than to protect themselves as a lender.
“The rate increases are a reflection of economic conditions and as the bank takes a risk that the borrower may not pay back the loan. Thus, interest provides a certain compensation for bearing risk.”
The CBA announced it has increased the variable rate for its ‘no-frills’ home loan for new customers with deposits of 30% as of 1 March. This will include ‘work-in-progress’ loan applications.
One-year fixed rates will increase to 5.99%, two-year fixed increases to 6.09%, and three-year fixed increases to 5.99%.
All rates are effective immediately.
NAB has also increased its variable rates for new customers, but has only lifted the rates for loans with deposits of 20% or less. It lifted the rate 0.2 per cent to 6.44%. Rates for new customers with bigger deposits remain steady.
Ms Matthews says the changes should be motivation for buyers looking to enter the real estate market to shop around.
“With the rates going up prior to the rate hike, it allows borrowers to explore the market and prepare for the worst that could come.
“We always suggest that find out what the rate you could be going on to and look to see if they can reduce or compete with other lenders.”
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