NAB the first of the big four banks to drop rates

NAB has followed the Bank of Queensland and ING Direct in cutting its standard variable home loan rate by 20 basis points.

In doing so NAB became the first of the big four banks to move on interest rates after the Reserve Bank decided at its final meeting of the year on Tuesday to cut the cash rate by 25 basis points to 3%.

Westpac, the Commonwealth and ANZ were yet to make a decision on rates.

However, ING is the only institution to pass on the cut in full so far.

NAB issued a statement defending its decision not to pass on the full RBA reduction.

"The impact of deposit and wholesale funding costs remain high, resulting from instability in the global economy and low confidence domestically," said Lisa Gray, NAB's group executive personal banking.

NAB said its new variable rate of 6.38%, effective from December 10, was the lowest of the major banks and would save people with a $300,000 mortgage $50 a month.

But a quick look at a number of online comparison sites reveals it is by no means the cheapest variable home loan rate on the market.

For example, interestrate.com.au shows standard variable rates offered by Queenslanders Credit Union (5.97%), AMP (5.9%) and People's Choice Credit Union (5.99%) all have significantly cheaper standard variable rates than the big banks.

Of course people shopping around for the best rate should read the fine print and be mindful of hidden costs.

HOW THEY COMPARE

Standard variable rates for the big four banks as of Wednesday:

  • NAB 6.38%  
  • Commonwealth 6.60%
  • ANZ 6.60%  
  • Westpac 6.71%

*NAB is the only one of the big four to have reduced its variable rate since Tuesday's RBA decision.


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