National Australia Bank has wasted little time reconfiguring the mortgage pricing of its newly acquired digital bank, 86 400.

The new subsidiary, which was legally joined to the NAB group on 11 June, yesterday slashed its fixed rate mortgage offers to bring its pricing more into line with its parent and the UBank arm.

In the owner occupier market 86 400 has slashed fixed rates by as much as 31 basis points to reprice its one, two and three-year mortgages at under 2 per cent.

The one year fixed rate, which is now being offered at 1.84 per cent is among the cheapest in the industry, as is the pricing for the two year product(1.89 per cent) and the three year rate (1.99 per cent).

Despite the reductions, 86 400 fixed rate mortgages are generally being marketed at a slight premium to corresponding products offered under the NAB and UBank brands.

UBank is offering one year fixed rate mortgages to owner occupiers at 1.75 per cent and three year home loans at 1.85 per cent.

UBank’s five year fixed rate mortgage (2.24 per cent) is also significantly cheaper than 86 400 (2.50 per cent).

Investment borrowers are also being offered cheaper fixed rate loans at UBank.While 86 400 has pitched five year interest-only mortgages at 3.04 per cent, UBank customers can get 2.64 per cent.

NAB appears to be differentiating its pricing strategy in the fixed rate market in an attempt to retrieve momentum in home lending.

The bank has struggled to grow its mortgage book since the pandemic hit Australia early last year.

According to APRA data, the size of NAB’s home loan business expanded by only 0.5 per cent in the 12 months to the end of April, while industry peers such as ANZ and CBA grew their books by more than 5 per cent.

NAB’s pricing strategy indicates it is seeking to buy back market share at some cost to its net interest margin.

ANZ and Westpac are heading in the opposite direction after increasing rates on most fixed rate mortgages for owner occupiers in recent weeks.