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NAB has become the first of the big four banks to cut fixed-term interest rates, a move that signals an official rate drop may be on the horizon.
The nation's third-largest home loan lender has cut its three-year fixed rate for owner-occupiers paying principal and interest by 60 basis points, taking it down to 5.99 per cent.
There is no change to its variable rate.
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While fixed-rate mortgages had been commonplace during the pandemic when the official cash rate was hovering at 0.1 and 0.25 per cent, they're now at near-historic lows.
"The popularity of fixed rates peaked back in July 2021 when 46 per cent of new and refinanced loans opted for a fixed rate, according to the ABS. This now sits at just 1.7 per cent in the most recent data," RateCity research director Sally Tindall said.
"It's hard to see people flocking back to fixed rates, but this rate under 6 per cent from NAB is designed to test this.
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"However, fixing for three years is a big financial commitment at any time, but particularly when the future of the cash rate remains highly uncertain.
"(RBA Governor Michele) Bullock has said the cash rate is in 'restrictive territory', which means it's likely to come down at some point, however, not even the RBA knows exactly when that will be, by how much, and whether we're likely to see more hikes before then."
While an official rate cut appears to still be months away, and higher-than-expected inflation data has even fuelled speculation of an increase coming first, NAB's decision suggests it believes the central bank's next move will be a cut, not a raise.
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"NAB's decision to slash their three-year fixed rate by 60 basis points suggests they anticipate a significant drop in the cash rate over the next few years," Mozo finance expert Rachel Wastell said.
"This aggressive rate cut by NAB could be a response to ANZ's acquisition of Suncorp, and is a clear bid to lure customers by betting on future cash rate reductions.
"Borrowers considering longer-term fixed rates should be cautious. When the cash rate eventually drops, those on fixed rates might end up paying more than those on variable rates.
"Remember, banks are experts at predicting cash rate movements, so locking in a rate is essentially a bet against the house."
The Reserve Bank's next interest rates decision will be made on August 6.
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