NAB has announced a 0.25% per annum interest rate reduction on its eligible business lending products, aligning with the Reserve Bank of Australia’s latest cash rate cut. The adjustment will apply to variable rate NAB Business Options Loans and NAB Business Overdraft products from 30 May 2025, offering relief to both new and existing business customers.
Figure 1: NAB announced a 0.25% per annum interest rate reduction on business loans
Support for Australia’s Business Sector
NAB Group Executive for Business & Private Banking Michael Saadie said the move aims to build confidence within Australia’s business community while also easing financial pressures. “Business is the heartbeat of Australia’s economy and we know lower interest rates drive greater confidence right across the business community,” Mr Saadie said, highlighting the importance of supporting enterprises during challenging conditions.
Mr Saadie noted that many business clients also bank personally with NAB, suggesting a broader impact from interest reductions across both business and home lending portfolios. “Many of our business customers also bank with us personally, so we are confident the combined impact of rate reductions across our business and home lending products will contribute positively to that,” he said.
Helping Businesses Focus on Growth
Addressing broader economic challenges, Mr Saadie stated the rate cut responds directly to current market pressures, including trade instability, rising costs and cashflow issues. “As businesses contend with global trade uncertainty, tariffs, costs and cashflow challenges, NAB is reducing interest rates to help our customers focus on what matters most – running and growing their business,” he said, reaffirming NAB’s intention to support business continuity and resilience.
He added that although lower interest rates offer some relief, NAB understands that certain businesses still face difficult conditions and require additional help. “While lower interest rates are welcome news, we know some business customers are facing tougher trading conditions which is why we have a range of support options available to those who need it,” he said.
Changes Effective from Late May
Eligible business customers will see the updated interest rates reflected in their next statement after 30 May 2025, with options available to either reduce repayments or continue current payment levels. Maintaining the current repayment schedule allows customers to reduce interest paid over the life of the loan. NAB also confirmed it continues to review its interest rates for business deposit products regularly, ensuring alignment with broader economic movements and competitive conditions.
Home Loans Also Receive Rate Relief
The business loan adjustment follows NAB’s earlier decision to reduce its standard variable interest rate on home loan products by 0.25% per annum. This comprehensive rate reduction strategy reflects NAB’s intent to provide widespread relief to both businesses and individual borrowers in light of current economic trends.
Figure 2: NAB also lowers the interest rate on home loans by 0.25% per annum
Rate Cut Triggers Broader Economic Impact
The RBA’s decision to cut the cash rate by 25 basis points to 3.85% marks its second reduction this year, returning the rate to its lowest level since May 2023. The announcement has prompted widespread commentary from financial analysts and consumer advocates, with forecasts of significant shifts in housing market activity. SQM Research managing director Louis Christopher predicted a potential 10% rise in housing prices by the end of 2025, citing the increased borrowing capacity of first-home buyers following successive rate cuts. “It is very likely housing prices will rise from here and continue into 2026,” he said.
Mr Christopher encouraged first-home buyers to act promptly or risk losing their current affordability advantage. “From today’s rate cut and the one in March, first home buyers are in a better buying position compared to six months ago,” he said. “Their purchasing and borrowing power has increased. However, if I am right about price rises, they will need to move quickly, otherwise they will be back to square one on affordability,” he added.
Also Read: ASX 200 Midday Market Update – 21 May 2025
Criticism of Government’s Housing Policy
Financial commentator Scott Pape, known as the Barefoot Investor, criticised the federal government’s approach to home affordability, particularly the planned five per cent deposit scheme set to begin on 1 January 2026. “If I was a young person right now I would be pretty pissed off,” Mr Pape said. “Every time a young person gets close, it just keeps getting more expensive,” he added, expressing concern about accessibility for first-home buyers.
He described the deposit scheme as ill-advised and detrimental, particularly in markets with already high housing costs. “It’s stupid, totally stupid,” Mr Pape said. “People shouldn’t be buying a home in one of the most expensive cities in the world if they can’t afford it. I don’t understand how a responsible government can stand by and say this is a good thing,” he said.
Inflation Data Supports Monetary Policy Shift
The RBA based its latest decision on updated inflation figures, which showed trimmed mean inflation at 2.9% for the March quarter, down from 3.3% in December. This figure marked the lowest annual inflation rate since December 2021 and brought inflation back within the RBA’s target band of two to three per cent. The central bank indicated it remains open to further rate cuts depending on ongoing inflation trends. “Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance,” the RBA board stated, confirming its outlook for inflation to remain within its target range sustainably.
