NAB follows suit, hikes mortgage rates
NAB has finally joined its big four rivals in hiking variable mortgage rates, citing funding costs and shareholders.
Mentioned: ANZ Group Holdings Ltd (ANZ), Commonwealth Bank of Australia (CBA), National Australia Bank Ltd (NAB), Westpac Banking Corp (WBC)
SYDNEY [AAP] - National Australia Bank (ASX: NAB) has finally joined its big four rivals in hiking variable mortgage rates, citing funding costs and shareholders.
NAB had for months resisted following Commonwealth Bank (ASX: CBA), Westpac (ASX: WBC) and ANZ Bank (ASX: ANZ) in imposing out-of-cycle rate hikes - citing a desire to reward customer loyalty and build trust - but on Thursday said it was raising standard variable rates for both owner-occupiers and investors.
NAB consumer boss Mike Baird said NAB was balancing those aims with the need to satisfy shareholders and respond to increased funding costs.
The move will add $22 per month to the principal and interest repayments on a $300,000 owner-occupier home loan over a 30-year term.
"Our decision to hold our standard variable rate since September last year, the only major Australian bank to do so, has led to around $70 million remaining in the households of more than 930,000 NAB customers," the former NSW premier said.
"We wanted to reward our existing customers for their loyalty and held off as long as we could despite being subject to the same increasing wholesale funding costs and market pressures as other major lenders."
Westpac sparked the round of rate increases in August, citing funding pressures even though the Reserve Bank has kept the cash rate at a record low 1.5 per cent since August 2016.
Growing numbers of economists are predicting the RBA will cut the cash rate further before the end of the year in an attempt to stimulate consumer spending, which could place public and political pressure on banks to reduce rates.
NAB will from next Thursday raise its standard variable rate for owner-occupiers repaying principal and interest by 0.12 percentage points to 5.36 per cent.
That is the same as ANZ and lower than CBA and Westpac, at 5.37 and 5.38 per cent respectively.
NAB's owner-occupier interest-only rate and all investor rates will rise by 0.16 percentage points.
NAB's acknowledgement of shareholders comes a month after more than 80 per cent voted against the bank's remuneration report following a year in which annual cash earnings fell 14.2 per cent.
