NAB, ANZ hike variable rates

by Mina Martin16 May 2022

Millions of variable rate borrowers face higher interest on their mortgages as two of the big-four banks’ officially hiked their rates last week. 

NAB and ANZ, the nation’s third- and fourth-largest lenders, increased their variable rates for both new and existing customers by 0.25% on Friday, following RBA’s historic cash rate hike earlier this month. 

Both Westpac and CBA are set to also lift their variable home loan rates on May 17 and May 20, respectively.

This would mean an additional $60 a month in mortgage repayments for an owner-occupier with a $500,000 owing and 25 years remaining on their loan.

RateCity.com.au showed the impact of the recent hike on advertised rates for NAB variable customers:

  

Old rate 

New rate 

Increase in repayments, $500K 

Standard variable

4.52%

4.77%

$72 

Discounted variable

3.67%

3.92%

$68 

Lowest variable

2.19%

2.44%

$62 

Note: Repayments are for an owner-occupier paying principal and interest with a $500,000 loan over 25 years. Rates effective May 13.

RateCity.com.au also showed the impact of the recent hike on advertised rates for ANZ variable customers:

  

Old rate

New rate

Increase in repayments, $500K

Index rate 

4.39% 

4.64%

$71 

Discounted variable 

2.99% 

3.24%

$65 

Lowest variable 

2.19% 

2.44%

$62 

Note: Repayments are for an owner-occupier paying principal and interest with a $500,000 loan over 25 years. An LVR of 70% applies to ANZ’s lowest variable rate. 

The rate hikes are unlikely to stop here, however. RBA Governor Philip Lowe said that over time, interest rates could potentially reach 2.5%. And if this occurred over the next couple of years, the same borrower with a current loan of $500,000, could see their monthly repayments increase in total by around $650. 

“RBA rate hikes are upon us. If you’re going to feel the pressure, do something about it,” said Sally Tindall, RateCity.com.au research director. “Understand what this first hike means for you, but also what your monthly repayments might look like if your rate rose to over 5% in the next couple of years. It might not get that high, but people need to have a plan if it does. If you don’t think you’ll be able to make these higher repayments easily, start tightening your belt now. Cutting back on regular expenses can inject some immediate relief into your budget, while switching to a lower cost loan could buy you some time to build a buffer.” 

Tindall said that so far, three lenders have confirmed they will continue to offer variable rates under 2% despite the hike – Homestar Finance, Reduce Home Loans, and Freedom Lend. Around 40 lenders, meanwhile, are likely to offer at least one variable rate under 2.3%.

“However, these rates are unlikely to last beyond the next rate hike, which could be within weeks,” she said. “Get up the gumption to ask your boss for a pay rise, especially if you haven’t had a decent increase in a while. If you can pull it off, this will help you keep up with the rate hikes to come.”