NAB has slashed all its fixed home loan interest rates. The move comes a day after the Big Four bank announced it expects a supersized 0.50 per cent rate cut from the Reserve Bank of Australia (RBA) in May.

NAB has cut interest rates by up to 0.55 percentage points today, with its lowest fixed rate now 5.39 per cent on a three-year term for owner-occupiers. The sweeping cuts mean NAB now offers the lowest fixed rates out of the Big Four banks across loan terms from one to five years.

Canstar data insights director Sally Tindall said NAB was “putting its money where its mouth is” following its prediction of a double cash rate cut next month.

“The bank is aiming to attract borrowers looking to lock in now by offering up competitive rates as low as 5.39 per cent – the sharpest among the Big Four banks,” she said.

NAB is forecasting a total of 1.50 per cent of cuts, including a supersized cut in February and 0.25 per cent cuts in July, August, November and February. This would take the cash rate from the current 4.1 per cent to 2.6 per cent.

“Headwinds from the global environment have intensified, but error bounds around our forecast are large given uncertainty remains exceptionally elevated,” NAB economic chief economist Sally Auld said.

“Our call for a 50 basis points easing in May reflects the fact that with the real cash rate of 1.3 per cent and policy currently restrictive, the RBA needs to play catch up.

“Once the cash rate reaches a level more consistent with a neutral policy setting, we then expect the RBA to pause for a few months before taking the cash rate into modestly accommodative territory.”

Warning over fixed interest rates

If NAB’s forecast is correct, Tindall said the average owner-occupier variable rate could drop to 4.56 per cent, which is 0.83 per cent below NAB’s current lowest fixed rate.

“If you are weighing up between fixed and variable, know that the future of the cash rate is highly uncertain,” she said.

“There are plenty of economists expecting rapid rate cuts on the back of the tariff turmoil, however, the RBA Governor isn’t so certain, saying it’s 'too early' for the Board to know the path for the cash rate.”

Tindall said borrowers needed to be aware that the cash rate was likely to fall further from here, but just how many more cuts were still unclear.

Australian Mutual Bank and Northern Inland Credit Union currently offer the lowest fixed rates on Canstar’s database at 5.29 per cent for 2-year and 3-year terms.

Big Four banks' interest rate cut predictions 

All Big Four banks are expecting interest rates will be cut in May. 

Here's what they are forecasting for the rest of the cycle: