NAB bank dramatically cut interest rates for millions of Australians: Here’s how much you’ll save

A major Australian bank has slashed variable mortgage rates even though borrowers have missed out on relief from the Reserve Bank. 

NAB has reduced its base rate for owner occupiers by 40 basis points, taking variable rates down to 6.44 per cent.

The latest relief – outside of an RBA rate cut – would see a new borrower with an average, $642,121 mortgage save $170 on monthly mortgage repayments. 

It’s also available for borrowers with a small 5 per cent mortgage deposit. 

But it is far from the lowest variable rate from a Big Four bank, with ANZ offering 6.14 per cent and the Commonwealth Bank charging 6.15 per cent on their digital-only home loans.

NAB’s latest reduction is a sign of more intense competition from the major banks, even though Reserve Bank of Australia Governor Michele Bullock has hinted at another possible rate rise. 

Canstar data insights director Sally Tindall said while the NAB offer was only for new customers, it meant borrowers with the major banks had leeway to negotiate a better deal on their loan.

‘If you’re an existing customer, there’s absolutely nothing stopping you from picking up the phone and asking for a rate cut,’ she said.

While the major banks are offering variable rates starting with a ‘six’, a Canstar analysis showed 38 smaller lenders with variable rates below that level.  

Mozo analyst Rachel Wastell said NAB’s latest move was a sign of intensifying competition in the absence of any RBA rate cut.

‘This substantial, out-of-cycle cut could be NAB’s response to intensifying competition between the Big Four banks, two of which are offering low rate digital-only home loan options for borrowers,’ she said.

The Reserve Bank of Australia this month left the cash rate on hold at 4.35 per cent, with borrowers missing out on relief despite the U.S., UK, Canada, European Union and New Zealand already cutting rates this year. 

Australia’s Big Four banks are now expecting the RBA to start cutting rates in February, with Ms Bullock declaring this month she was ‘not ruling anything in or out’.

But the 30-day interbank lending market doesn’t see relief starting until August, with traders now only expecting one rate cut in 2025.

In October, the market was expecting four rate cuts from the RBA.  

Ms Bullock said financial markets had expected global inflation to remain high regardless of whether or not Republican Donald Trump or Democrat Vice-President Kamala Harris had won this month’s U.S. presidential election.

Canstar data insights director Sally Tindall said while the NAB offer was only for new customers, it meant borrowers with the major banks had leeway to negotiate a better deal on their loan

‘The fact that there’s lots of policies there which will be potentially inflationary – tariffs, much spending – probably didn’t matter who won, there was always going to be a bigger deficit,’ she told a Sydney forum on Thursday.

‘It was just a matter if it would be reduced taxes or more spending that got your there.

‘There is going to be more government debt out there so I think that is part of what’s being reflected in bond markets.’ 

But Ms Bullock said president-elect Trump’s plans for 60 per cent tariffs on Chinese imports, and 10 to 20 per cent tariffs on other nations, could still affect financial markets.

‘We don’t know how other countries are going to respond to tariffs,’ she said. 

‘Ultimately, if it’s not good for the Chinese economy, it isn’t good for us either.’

Australia’s unemployment rate in October remained at 4.1 per cent with 36,800 jobs created in a sign the labour market is still strong as underlying inflation at 3.5 per cent remains above the RBA’s 2 to 3 per cent target. 

Public sector wages grew by 3.7 per cent in the year to September compared with 3.5 per cent for all other workers.