NAB-owned ubank slashes home loan rates by up to 74 basis points

The digital bank, developed and owned by NAB, now offers fixed rates as low as 5.79% p.a. and variable rates from 6.09% p.a.

It comes nearly six weeks after NAB revealed it had cut rates on many of its fixed rate home loan products to as low as 5.99% p.a.

Westpac and CommBank soon followed suit, with the latter big four bank simultaneously dropping variable rates on some mortgage products.

Tuesday's cuts see headline interest rates advertised on ubank's premium Flex variable home loan product inline with those on its basic Neat variable home loan product.

Ubank's Flex offering promises access to an offset account, while the Neat product comes with no annual fees.

The downwards movement represents "an effort to help customers get ahead with the right home loan, whether they're first time buyers or seasoned investors," the bank said.

Variable rate cuts for owner-occupiers

Interest rate changes made to the bank's variable rate Flex lineup for owner-occupiers making principal and interest repayments are as follows:

Product	LVR	Change	New rate (p.a.)	Comparison rate* (p.a.)
Flex Variable	<60%	-5bp	6.09%	6.33%
Flex Variable	60-80%	-5bp	6.14%	6.38%
Flex Variable	80-85%	-10bp	6.64%	6.88%

Unlike the majority of lenders on the market, ubank doesn't offer home loans to borrowers with deposits worth less than 15% of their property's value – meaning those with loan-to-value ratios (LVRs) of more than 85% can't borrow from the bank.

However, it also doesn't ask any borrower to pay for Lenders Mortgage Insurance (LMI), so a person with an LVR of between 80% and 85% might find ubank a compelling proposition.

See also: How to avoid paying LMI

Variable rate cuts for investors

Ubank also cut variable rates on offer to property investors, with its Flex home loan lineup now advertising these rates:

Product	LVR	Change	New rate (p.a.)	Comparison rate* (p.a.)
Investment Flex Variable P&I	<60%	-5bp	6.24%	6.48%
Investment Flex Variable P&I	60-80%	-5bp	6.29%	6.53%
Investment Flex Variable IO	<60%	-10bp	6.54%	6.59%
Investment Flex Variable IO	60-80%	-5bp	6.64%	6.66%

Fixed rate cuts revealed by ubank

Fixed rates have been on the nose with Aussie borrowers in recent years - less than 3% of home loans signed in June had a fixed rate of interest.

But lenders' advertised fixed rates are generally worth keeping an eye on, whether or not you're in the market for a fixed rate mortgage.

Banks and lenders tend to price fixed rates in a way they expect will remain profitable for the foreseeable future.

When a lender sets fixed rates lower than variable rates, it's a good sign it expects the cash rate to fall in the not-so-distant future.

The opposite might be true if its fixed rates are higher than its variable offerings.

NAB is the most bearish of the big four banks on the prospect of a cash rate cut.

It's tipping the Reserve Bank of Australia (RBA) board to hold the cash rate at its current level until May 2025, thereby keeping interest rates charged to borrowers high until then.

Westpac and ANZ, meanwhile, are forecasting a February 2025 cut, while CommBank is even more optimistic in predicting a November 2024 cut.

With that in mind, here are the changes that NAB's ubank made to its advertised fixed rates (for owner-occupiers making principal and interest repayments) on Tuesday:

Fixed term	LVR	Change	New rate (p.a.)	Comparison rate* (p.a.)
One year	≤60%	-40bp	5.99%	6.32%
	60-80%	-40bp	5.99%	6.37%
	80-85%	-73bp	6.25%	6.83%
Two years	≤60%	-30bp	5.79%	6.27%
	60-80%	-30bp	5.79%	6.31%
	80-85%	-55bp	6.29%	6.81%
Three years	≤60%	-20bp	5.79%	6.25%
	60-80%	-20bp	5.79%	6.28%
	80-85%	-55bp	6.29%	6.77%
Five years	≤60%	-40bp	5.79%	6.20%
	60-80%	-40bp	5.79%	6.23%
	80-85%	-69bp	6.29%	6.72%

Ubank demystifying the home loan process 

Ubank also released new research on Tuesday, finding young Australians are still lazer-focused on entering the property market.

Despite interest rates being at 12-year highs and house prices reaching unprecedented levels, nine in ten Millennials and Gen Zs who don't own a home consider climbing onto the property ladder to be one of their life's ambitions.

However, confusing jargon and the complexity of buying a home and securing a home loan are significant barriers.

"We understand that the process can be stressful, and that's why we're using technology to make home lending fast, simple, and easy and partnering with individuals and organisations to demystify the home buying journey," ubank chief home lending officer Kanishka Raja said.

The bank has created a suite of educational content and guides for first home buyers and is partnering with the Ladies Finance Club in October for a national roadshow to inform hopeful-  homebuyers on the home-buying process.

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^{Image by Michel Bocquet on Unsplash}