NAB chief operating officer Antony Cahill says the bank will not charge a fee for owner occupiers who switch to the P & I repayments. Picture: Mark WilsonA SENIOR manager of one of Australia’s Big Four banks is urging customers to switch from interest only to principal and interest repayments amid sweeping changes to interest rates starting next Friday.National Australia Bank has confirmed it will drop interest rates for some owner occupiers from next Friday but residential investors and those who make interest only repayments are in for a rough ride.National Australia Bank chief operating officer Antony Cahill announced the changes to variable home loan interest rates will be effective from next Friday June 30.“The interest rate for owner occupiers making principal and interest repayments will decrease by 0.08 per cent per annum, to 5.24 per cent per annum,” a NAB statement said, but those who make interest only repayments will see their interest rate rise 0.35 per cent per annum, to 5.77 per cent per annum.”According to RateCity, the changes – which follow hard on the heels of Westpac and ANZ – mean investors and interest only owner occupiers 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.RateCity Money Editor Sally Tindall said Australians needed to go on a “debt diet”.“An astounding 41 per cent of loans on the Big4 banks’ books are interest-only. That’s a huge proportion of Australians who aren’t paying off a single cent of debt,” she said.“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.” More from newsMould, age, not enough to stop 17 bidders fighting for this home4 hours agoBuyers ‘crazy’ not to take govt freebies, says 28-yr-old investor4 hours agoNAB acknowledged the impact the changes would have on those who make interest only repayments.Mr Cahill acknowledged that the changes would have an impact on certain home loan customers and said the bank would not charge a fee to switch to P&I loans.“Borrowers will not incur a fee to switch their repayments to principal and interest; customers are encouraged to discuss variations to their home loan with their banker or broker.”Mr Cahill insists the changes have nothing to do with the Federal Government’s new major bank levy – a new measure that imposes a charge on banks that hold total liabilities over $100 billion.“We need to comply with our regulatory requirements, including APRA’s 30 per cent limit on new interest only lending for residential mortgages, while balancing the needs of customers across our entire portfolio and continuing to provide competitive rates,” Mr Cahill said.The highest charges were reserved for investors who make interest only repayments, with their rate to rise by 0.35 per cent per annum to 6.25 per cent a year.He expected 80 per cent of the bank’s owner occupier home loan customers to benefit from the change.“The 0.08 per cent per annum decrease will see owner occupier customers making principal and interest repayments save $14 each month, or $168 each year, and help them to pay off their home loan sooner,” he said, basing that off a new $300,000 loan over a 30-year term.Mr Cahill said NAB’s first homebuyer special of 3.69 per cent per annum fixed for two years was still on the table.
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