One bank is evening out the playing field for owner-occupiers on mortgage rates while Westpac decreases fixed rates for certain loans.
NAB scrapped the tiered system of rates for different deposit sizes on its basic variable loan, charging 6.49 per cent to all customers with that mortgage.
The move effectively cuts the rate for owner-occupiers with deposits of less than 20 per cent by 0.70 percentage points from 7.19 per cent to 6.49 per cent.
The move has “bucked the trend” among the big banks, according to RateCity research director Sally Tindall.
“This is an unusual move from Australia’s third largest home loan lender. For years, banks have been moving to a risk-based pricing system where borrowers with small deposits are slugged with higher rates,” Ms Tindall said.
“NAB is opening the door specifically to owner-occupiers with small deposits, who are often first home buyers madly searching for options to get a foot in the market.”
Westpac on Wednesday send an email to customers saying it had decreased its two-year fixed rates for Investment Property Loans.
Meanwhile, the major bank has also increased its Flexi First Home Loan by 0.10 percentage points, decreasing the two year introductory discount and promotional discount.
The new rate for those with a deposit over 30 per cent now sits at 6.09 per cent for two years before jumping to 6.49 per cent.
Those with a 20 per cent deposit will pay 6.19 per cent interest for two years before it jumps to 6.19 per cent.
Though the changes don’t affect the base rate of the loan, the seemingly small move means that none of the big four banks offer mortgage holders a loan with an interest rate below six per cent.
The move was described as a “strategic move to walk away from the cutthroat competition in the home loan market” by RateCity research director Sally Tindall.
“This move by Westpac shuts the door on advertised variable rates under 6 per cent from the big four banks,” Ms Tindall said.
“It’s unlikely we’ll see an advertised variable rate from a big four bank under 6 per cent until the RBA starts cutting the cash rate.”
She went on to say that while Westpac was “swimming with the tide” by hiking its basic variable loan, NAB was “going against it” by cutting this rate for owner-occupiers with small deposits.