NAB cuts 3-year fixed mortgage rate, becoming first big four bank to offer sub-6% rate in 2024.

National Australia Bank (NAB) has reduced its 3-year fixed mortgage rate by 0.60 percentage points, marking the first fixed rate change from a major bank this year. This move makes NAB the only big four bank currently offering an advertised rate below 6%.

Key points:

1. NAB’s new 3-year fixed rate for owner-occupiers paying principal and interest is 5.99%, down from 6.59%.

2. This rate applies to borrowers with at least a 30% deposit. Those with smaller deposits can access a rate of 6.04%.

3. The next lowest big four bank fixed rate is 6.49% from Westpac for a 2-year term.

4. Despite this cut, smaller lenders still offer lower rates, with Community First Bank, Police Bank, Bank of Heritage Isle and Border Bank offering 3-year fixed rates at 5.59%.

   

RateCity.com.au research director Sally Tindall commented on NAB’s move:

“This is a strategic move from NAB in a bid to test whether there’s any appetite among borrowers to revert back to fixing,” Tindall said.

She noted that while fixed rates were highly popular in July 2021, with 46% of new and refinanced loans opting for a fixed rate, this figure has dropped to just 1.7% in the most recent data.

Tindall cautioned borrowers about the implications of fixing for three years:

“Fixing for three years is a big financial commitment at any time, but particularly when the future of the cash rate remains highly uncertain,” she said.

She also highlighted that fixed-rate loans are typically less flexible, with caps on extra repayments and usually no access to offset accounts.

NAB’s economic team recently revised their forecast for the first cash rate cut, now predicting it won’t arrive until May 2025, later than their previous November 2024 prediction.

This rate cut comes as the Reserve Bank of Australia (RBA) is considering a potential cash rate hike due to persistent inflation, making short-term fixed rates a potentially attractive option for some borrowers.

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