Major bank’s fresh blow to homebuyers

Real estate professionals offer their clients contracts to discuss home purchases, insurance or real estate loans. Home sales agents sit at the office with new home buyers in the office.
New homebuyers have been dealt another blow with a major Australian bank poised to hike interest rates even further.

New homebuyers have been dealt another blow, with a major Australian bank poised to hike interest rates even further.

Banking giant NAB announced on Tuesday that new home loans would be slapped with an increased interest rate from May 23.

The base variable rate will increase by 0.10 per cent to 5.99 per cent for buyers looking to purchase a new home.

Residential investors will also see a 0.10 per cent hike, with a new rate of 6.34 per cent for principal and interest loan repayments.

For interest-only repayments, investors are facing a new base variable rate of 6.79 per cent.

Australian Fifty Dollar Banknote - Austraian Currency
Taking out a new home loan is going to cost more. Picture: iStock

A NAB spokesperson said the new rate would only apply to new loans or existing borrowers taking out a new loan on top of an existing loan.

The fee for existing borrowers will only apply if they are borrowing more than $20,000.

NAB chief executive Ross McEwan told ABC RN Breakfast on Tuesday morning that the changes would not impact existing customers.

“First off, they’re new customers, so people can shop around and try and find a better rate than those ones,” he said.

“So, they can make the choice as to whether they want that rate or from somewhere else.

“And that was quite specific around customers have choice.

“It’s not as though they are on the rate today and it’s moved. That (rate) is a new proposition.”

The news comes off the back of successive interest rate hikes that have hit borrowers hard.

Reserve Bank of Australia governor Phillip Lowe announced earlier this month that the cash rate would increase to 3.85 per cent.

The hike came after a months-long pause in interest rate increases that offered a brief reprieve to borrowers.

Commonwealth Bank was the last of the big four banks to raise its interest rates soon after the announcement.

CBA revealed that it would raise home loan variable interest rates by 0.25 per cent per annum from May 12.

Reserve Bank governor Phillip Lowe announced another interest rate hike in May. Picture: Jeremy Piper

The move coincided with increases to the bank’s saving rates.

CommBank retail banking executive Angus Sullivan said the bank would support borrowers facing hardships.

“We understand the combination of increasing interest rates and the rising cost of living is creating challenges for some customers,” he said.

Renters were also dealt a blow this week after new data revealed the number of low-cost rentals had almost halved.

The figure, which impacted towns and cities across the country, represented a historic low in rentals costing less than $400 a week.