NAB's lower variable home loan rates reflect pricing strategy revamp

Earlier this week, Australia’s third-biggest lender unveiled the new rates on its Tailored Home Loan, slashing up to 108 basis points to bring the advertised rates down to 6.79% p.a. (6.87% p.a. comparison rate*) for owner-occupiers and 7.09% p.a. (7.17% p.a. comparison rate*) for investors. 

The adjusted rates are available to new customers. 

NAB’s Tailored product comes with an offset account and a monthly service fee of $8. It’s available in principal and interest (P&I) and interest-only (IO) repayments with a loan-to-value ratio (LVR) starting at 60% up to 90%. 

NAB brings advertised rates in line with actual rates

The bank’s recent adjustments were less about a rate cut and more of an overhaul of its marketing strategy. 

“We regularly review our home loan pricing for new customers and make changes from time to time that reflect the changing market,” NAB’s spokesperson told InfoChoice.

Through the rate tightening cycle from May 2022, former NAB boss Ross McEwan was explicit in the bank's approach to protect margins rather than grow the loan book.

Andrew Irvine became the new CEO earlier this month.

NAB's latest move aims to bring the products’ advertised rates in line with the actual – and much lower – rates borrowers end up paying. 

Big banks like NAB have been employing this marketing strategy to give them breathing room that allows them to offer customers ‘special’ discounts off artificially inflated advertised rates. 

Australia’s biggest bank Commonwealth Bank (CBA) was the first to overhaul its home loan pricing in November 2022 to bring the advertised rates closer to the actual rates offered. 

In light of the pricing revamp, NAB’s basic variable home loan product remains unchanged at 6.84% p.a. (6.88% p.a. comparison rate*). 

Variable rates trend lower in anticipation of RBA cuts

This week's adjustments put NAB in the company of lenders that have dropped variable home loan rates.

In recent weeks, smaller lenders have begun lowering variable rates following a series of cuts on fixed-rate home loans in previous months.

The latest ABS lending data revealed nearly all (98.56%) mortgages, including refinancing, in February 2024 were variable loans.

Even NAB’s portfolio shows more customers are on variable loans at 76.8% – this figure includes borrowers who signed on to the bank’s Tailored and Basic variable products. 

During the Covid-19 pandemic, when interest rates hit record lows, the value of housing loans on fixed rates peaked at almost 40%, twice their usual share pre-pandemic.

It appears borrowers are opting out of locking into fixed-term loans in anticipation of the RBA slashing the official cash rate sometime this year.

All four major banks' teams of economists expect the current 4.35% benchmark rate to drop in the third quarter, with NAB fully priced for a November rate cut.

NAB variable home loans for owner-occupiers

Here are the new rates of NAB’s Tailored variable mortgage for owner-occupiers

NAB variable home loans for investors

Investors taking out NAB’s Tailored variable home loans get these newly adjusted rates.

Read more: RBA Home Loans News NAB Big 4 Economic News Banking News

Bernadette Lunas

Finance Journalist

Bernadette is a journalist with years of experience covering topics in macroeconomics, real estate, and lifestyle beats for notable print media organisations. She joined the InfoChoice Group in 2024, bringing her passion for writing stories that help Australians make better decisions about money.

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