Big four bank jumps the gun on RBA with early variable home loan interest rate cut

NAB has moved to attract mortgage holders with a pre-Christmas cut to its basic variable home loan rate, even though an official interest rate cut from the Reserve Bank still seems months away.

The bank today cut its base variable home loan rate for new customers by 0.4 per cent, down from 6.84 to 6.44 per cent.

"For new NAB customers with a $500,000 loan, today's cut means a reduction of $126 on monthly repayments, which is a substantial sized reduction in lieu of an RBA rate cut," Mozo personal finance expert Rachel Wastell said.

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"In fact, when looking at the size of RBA rate cuts historically, the RBA likely would only have cut 25 basis points if they moved in November, so this is pretty close to the value of two RBA cuts."

Despite the cut, NAB's offering remains higher than that of ANZ and Commonwealth Bank – both of whom have digital-only mortgage rates about 0.3 per cent lower.

It is on par with Westpac, but requires a far lower minimum deposit than its big four rival.

"NAB's no-frills mortgage rate has, for months, been an outlier among the big four, especially since the introduction of CBA's and ANZ's digital-only home loans," Canstar data insights director Sally Tindall said.

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"This rate cut by NAB brings its lowest variable rate back in line with the big bank pack.

"Over the last few months, NAB's home loan book has been sluggish, particularly in light of the recent gains made by CBA and ANZ. This move should help the bank reverse this.

"Existing NAB borrowers could find today's news frustrating, as these rate cuts are only on offer for new customers.

"However, if you're an existing customer, there's absolutely nothing stopping you from picking up the phone and asking for a rate cut."

While the RBA's next meeting is less than a month away, most economists and all the big four banks aren't expecting an interest rate cut until February.