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National Australia Bank is raising its fixed mortgage rates sharply on rising funding costs, following a similar move by Commonwealth Bank this week.
NAB announced on Friday that it would increase fixed rates in terms of one to five years, achieving the largest increase of 1.1 percentage points in its one-year fixed rate loan, which will now have a rate of 4 .69%.
National Australia Bank will increase its fixed mortgage rates. Credit:Paul Jeffers
It increases the two-year fixed rates by 1 percentage point, to 5.59%, while it increases the 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 raised fixed rates sharply this year in anticipation of several interest rate hikes from the Reserve Bank. . CBA announced a particularly strong hike on Thursday, raising its fixed rates by 1.4 percentage points.
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NAB Director of Home Ownership, Andy Kerr, said: “We review our interest rates regularly to ensure we continue to offer our customers competitive rates while responding to market changes.
“Funding costs for longer-term loans have increased this year. The sustained increase in costs led us to modify our fixed mortgage rates. These changes do not impact the prices of our existing customers.
RateCity research director Sally Tindall said other banks, including ANZ Bank, Macquarie and HSBC, had all made “significant” fixed rate hikes in the past two weeks, and she expected until other banks follow suit.
“Banks are reacting to the rising cost of fixed rate funding, but they are also heeding market expectations that the cash rate will go above the RBA’s suggested neutral cash rate of 2.50%,” Tindall said.