NAB vows to keep variable rates on hold in bid to win back trust

UNLIKE its rivals, National Australia Bank has declared it will hold its standard variable rate for home-loan customers. But how long will it last?

NATIONAL Australia Bank has declared it will hold its standard variable rate for customers in a desperate bid to win back customer trust.

The bank has been left bruised and battered in the financial services royal commission for actions including charging customers fees for no service and has also been taken to the Federal Court.

Traditionally the Big Four banks have remained in lock-step and all moved rates within hour if not days of each other, but NAB has bucked this trend.

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The failure to move will relieve its 930,000 owner occupier and investor borrowers but it remains how long the bank will stay idle on rates.

It will save a borrower with a $300,000 variable loan an extra $28 per month if rates lifted by 0.15 percentage points, but on the flipside will cost the bank an estimated $197 million.

The failure to lift rates keeps NAB’s SVR — its benchmark interest rate — at the lowest of the Big Four banks at 5.24 per cent, behind ANZ at 5.36 per cent, CBA at 5.37 per cent and Westpac at 5.38 per cent.

The bank’s chief executive officer Andrew Thorburn said in an issued statement on Monday that NAB is “listening and acting differently.”

NAB CEO Andrew Thorburn says they are working to rebuild the trust of customers.

“We need to rebuild the trust of our customers and by holding our standard variable rate longer, we help out customers for longer,” he said.

“By focusing more on our customers we build trust and advocacy and this creates a more sustainable business.”

The move even prompted Prime Minister Scott Morrison to tweet, “Good call by @NAB not to lift mortgage rates. They seem to get it.”

Westpac was the first of the Big Four to announce it was hiking rates on August 29 and then last week ANZ and CBA both revealed they were doing the same.

The three banks have blamed the increases on escalating wholesale funding costs.

Mortgage online bidding service Loan Dolphin’s chief executive officer Ranin Mendis said while this was a relief for NAB customers it should prompt those who bank with other lenders to take action.

“This should encourage borrowers from other banks to really apply more pressure to either reduce their interest rate or seriously make the move to a different lender with a more competitive rate,” he said.

Financial comparison website Mozo’s spokeswoman Kirsty Lamont said NAB “isn’t expected to leave rates alone for long.”

STANDARD VARIABLE RATES

BANK RATE CHANGE

CBA 5.37 per cent October 4

ANZ 5.36 per cent September 27

Westpac 5.38 per cent September 19

NAB 5.2 per cent No change.