- NAB cuts its two-year fixed home loan rate in line with Westpac
- This puts pressure on CBA and ANZ to do the same
- Easy monetary policy has driven these rates lower
As first reported in RateCity, National Australia Bank (NAB) has cut its two-year fixed home loan rate from 2.04% to 1.89% today. This is the second fixed rate cut in recent weeks, dropping the rate 0.50% last month.
This move comes after Westpac was the first of the big four banks to cut its rate. This now puts immense pressure on the Commonwealth Bank of Australia (CBA) and ANZ to follow suit in order to remain competitive.
Big four banks – lowest owner-occupier rates (2-year fixed)
Source: Adapted and reproduced from RateCity
“Now all eyes are now on CBA and ANZ to see if they will jump on the bandwagon and bring their rates below 2 percent,” RateCity research director Sally Tindall said.
“People looking for a two-year fixed rate with a big four bank are going to find the rates from Westpac and NAB more attractive.”
The mortgage market was certainly different two years ago when big four bank two-year fixed rates averaged 3.76%. Now it is 1.97%.
RateCity analysis shows the average owner-occupier taking out one of those loans today would pay $382 less per month during the fixed term (paying principal and interest on a $400,000, 30-year loan).
“It’s no wonder people are willing to bid more at auction now than they were two years ago when the cost of taking on debt is today so much lower,” Ms Tindall said.
Auction clearance rates have broken new records recently.
Expansionary monetary policy has driven the cash ultra to a historical low of 0.10%, which has a flow-on effect for home loan interest rates.
These extremely low rates can be expected to be maintained through the rest of the year, as the Reserve Bank of Australia is committed to tackling unemployment and ensuring Australia’s strong economic recovery.
This means the cash rate is expected to remain low for at least two more years.