NAB is jacking up its interest rate for new and existing investor home loans in a bid to clamp down on “strong” growth in the segment.

From next Friday, March 24, NAB’s residential investment home loan variable rate will increase by 25 basis points from 5.55 per cent to 5.8 per cent per annum.

It comes a day after a warning from JP Morgan that investors who rely on property cashflows to meet mortgage repayments could face rate hikes of up to three per cent in the near future.

NAB chief operating officer Anthony Cahill said given strong growth in the investor segment, it was essential that NAB continued to manage its investor portfolio responsibly.

“We’re committed to managing our investor lending growth in line with the regulator’s guidance,” Mr Cahill said.

It comes as the major banks try to keep growth in investor loans below 10 per cent, as required by the Australian Prudential Regulation Authority.

NAB is also increasing its standard variable rate for owner occupiers by seven basis points, from 5.25 per cent to 5.32 per cent. For a NAB customer with a $300,000, 30-year loan, the change will amount to an extra $13 a month.

“We understand these changes will affect customers in different ways, and we always encourage customers to have a conversation with their banker or broker about what home loan suits them best,” Mr Cahill said.

“I encourage customers who want certainty about their repayments, or to find out what other options are available, to speak with their banker or broker, and whether a package, fixed rate, or split home loan might be right for their circumstances.”

He said that the decisions the bank made on interest rates were “difficult ones, and we want to assure our customers we do not take them lightly as we seek to achieve the right balance for all our stakeholders while considering the dynamic financial and economic environment in which we operate”.

“The difference between what we charge and how much it costs us to fund a mortgage remains under pressure, with intense competition, increasing regulation, and elevated funding costs,” he said. “By making a series of changes, both up and down, we are seeking to balance these across our entire mortgage portfolio.”

As a sweetener, NAB also announced a special two-year fixed rate for first-home buyers, “the lowest rate ever offered by NAB”, of 3.69 per cent. NAB’s current two-year fixed rate is 3.98 per cent. On a $300,000 loan, the rate cut will save customers around $50 per month over the two-year period, NAB said.

“Every dollar counts when you’re buying your first home, and this offer for first home buyers will provide real support to Australians wanting to enter the property market,” Mr Cahill said.

“This is the lowest home loan rate ever offered by NAB, and it will help Australians entering the property market for the first time to achieve their home ownership dreams.”

frank.chung@news.com.au