NAB breaks ranks

Bank says mortgage rate to stay low in bid to win back trust

NAB is keeping its variable mortgage rates on hold despite moves by its big four rivals to hike rates in response to increased funding costs.

Chief executive Andrew Thorburn said yesterday National Australia Bank would continue to monitor funding conditions, but would continue to hold its standard variable rate at 5.24 per cent.

Over the past two weeks Westpac, Commonwealth Bank and ANZ have said they would raise their standard variable rates for owner-occupiers to 5.38, 5.37 and 5.36 per cent.

Mr Thorburn indicated NAB’s decision was a direct result of an environment in which huge profits and revelations of misconduct aired at the royal commission had damaged the big banks’ public standing.

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

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

The hikes by NAB’s rivals led to economists last week suggesting the Reserve Bank of Australia would keep the cash rate on hold at a record low of 1.5 per cent for longer than previously thought.

The RBA, which had not moved on rates since August 2016, would be wary of increasing the load on borrowers — and decreasing the amount they could spend elsewhere in the economy — and could even cut the cash rate if the banks hiked further, AMP chief economist Shane Oliver said.

AAP