NAB breaks with other big banks and hold rates

NAB has broken ranks with the other big banks and kept home loan rates on hold, in a bid to win back customer trust.

“We need to rebuild trust,” says NAB CEO Andrew Thorburn.

National Australia Bank has broken ranks with the other big banks and kept its home loan rates on hold in an attempt to win back customer trust.

Blaming higher funding costs, Commonwealth Bank, ANZ and Westpac have all increased their home loan rates in the last few days and at 5.24 per cent NAB will have the lowest advertised standard variable home loan rate.

This compares to Westpac at 5.38 per cent, CBA at 5.37 per cent and ANZ at 5.36 per cent.

Second tier bank Suncorp is closer to six per cent.

NAB has 15.5 per cent of the home loan market - the same as ANZ behind CBA at 25.5 per cent and Westpac at 24.5 per cent.

The bank is also under fire at the royal commission and last week copped a writ from ASIC over charging fees for no service.

NAB chief Andrew Thorburn is meeting with his top 50 bankers this morning to explain the rate move, which he is selling as a definitive moment for the bank.

“We are listening and acting differently,” he said in a statement. “We need to rebuild the trust of our customers, and by holding our NAB standard variable rate longer, we help our customers for longer.”

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

Mr Thorburn said NAB will continue to regularly review its rates and assess whether current market conditions, including funding costs, continue.

NAB said its decision would benefit more than 930,000 NAB customers.

“If NAB had increased its SVR by 15 basis points, the average home loan customer with a $300,000 loan would have paid an extra $28 each month, or $336 a year, on their repayments,” it said.

“A customer with a $500,000 home loan would have paid an extra $47 each month, or $564 per year, on their repayments.”

Good call by @NAB not to lift mortgage rates. They seem to get it.

— Scott Morrison (@ScottMorrisonMP) September 10, 2018

NAB has recently granted concessions to farmer borrowers because of the drought and made it easier for small business borrowers.

Mr Thorburn is also boosting rural bank branches in an attempt to make it easier for farm borrowers.

With all the top banks having lifted their rates in the last week and the smaller banks before that, NAB will have the lowest home loan rate which, arguably, will boost market share.

Last week ANZ said borrowers with variable home loans would face a 16-basis-point rate rise from late this month, while CBA, in an announcement made moments after ANZ’s, said it would be hitting borrowers with a 15-basis-point hike by early next month.

Both banks lifted rates more than Westpac’s 14-basis-point rise of last week, in the first round of increases by the Big Four without a change in the Reserve Bank’s official interest rate since late 2015.

The banks’ moves come despite the Reserve Bank of Australia having kept the ­official cash rate at a record low of 1.5 per cent since 2016, and it being expected to hold steady for some time. The central bank is increasingly concerned about rising interest rates amid stalled wages growth and growing household debt.