National Australia Bank is increasing its fixed mortgage rates sharply as a result of rising funding costs, following a similar move from the Commonwealth Bank this week.
NAB on Friday said it would increase fixed rates across one to five-year terms, making the biggest increase of 1.1 percentage points in its one-year fixed-rate loan, which will now have a rate of 4.69 per cent.
National Australia Bank will increase its fixed mortgage rates. Credit:Paul Jeffers
It is lifting two-year fixed rates by 1 percentage point, to 5.59 per cent, while it is raising three, four and five-year rates by 0.8 percentage points.
The changes, which will only apply to new customers taking out new fixed-rate loans, come after banks have lifted fixed rates sharply this year in anticipation of several Reserve Bank interest rate increases. CBA on Thursday announced a particularly sharp increase, raising its fixed rates by 1.4 percentage points.
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NAB’s executive for home ownership, Andy Kerr, said: “We regularly review our interest rates to ensure we continue to offer our customers competitive rates while responding to market changes.
“Funding costs for longer-dated loans have increased this year. The sustained increase in costs led us to make a change to our fixed home loan rates. These changes do not impact the rates of our existing customers.”
RateCity research director Sally Tindall said other banks including ANZ Bank, Macquarie and HSBC had all made “sizeable” increases in fixed rates in the last two weeks, and she expected more banks would follow suit.
“The banks are responding to the rising cost of fixed-rate funding, but they’re also factoring in market expectations the cash rate will go beyond the RBA’s suggested neutral cash rate of 2.50 per cent,” Tindall said.
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