NAB follows suit in hiking interest-only rates
National Australia Bank has followed Westpac and ANZ by increasing rates for mortgage holders making interest-only repayments and reducing rates for owner-occupier customers paying off their loan, according to RateCity.
RateCity said investors and owner occupiers who pay interest-only will have to pay an extra $102 a month, or $1,224 a year, based on the average loan size of $350,000 over 30 years while owner-occupiers paying principal and interest have been given a small reprieve with $17 a month off their repayments, a savings of $204 a year.
Sally Tindall, RateCity Money Editor said today's changes were once again attributed to APRA’s new regulatory requirements.
"An astounding 41 percent of loans on the Big4 banks' books are interest-only," she said.
"That's a huge proportion of Australians who aren't paying off a single cent of debt.
"It's no wonder APRA is coming down hard. They want Australian mortgage holders to go on a debt-diet.
“Paying interest-only, particularly when you are an owner-occupier, is an expensive business.
“The average owner-occupier who elects to pay interest-only for the first five years of their loan will pay $67,810 extra to NAB over the life of their loan.
“When you look at the big picture, a couple of hundred dollars in savings each month pales in comparison to the long-term benefits of paying down debt."
