(Adds executive comments on housing market, background) Feb 22...

(Adds executive comments on housing market, background)

Feb 22 (Reuters) - National Australia Bank Ltd (NAB) said on Monday it had seen a quicker-than-usual uptick in domestic housing market demand after Christmas, and lowered some fixed home loan rates.

NAB, which last week posted a pick up in quarterly profit from the previous two quarters and pointed to an improving economy, said it expects house prices in Australia's capital cities to rise by about 10% this year.

Demand for houses in Australia is expected to benefit from record-low interest rates as the central bank has pledged to keep borrowing costs low for several years, and from easing COVID-19 lockdowns in the country.

"We're seeing very strong demand in the housing market with activity post-Christmas picking up much more quickly than usual. This has come despite the ongoing challenges presented through the pandemic," said Andy Kerr, executive, Home Ownership, a unit of NAB.

"For the past few months home lending applications have been at their highest level in several years as buyers flock back into the market after a quiet period through the nationwide lockdowns," Kerr said.

Australian home loan approvals surged 8.6% in December from a month earlier, official data showed this month, while housing prices jumped to a record high.

Australia's No.2 lender by market value said its three- and four-year fixed rates on home loan plans were now below 2%, while fixed rates on a 5-year loan package were down by 55 basis points to 2.29%. (https://nab.co/3dBnOI6)