MNI Australia NAB Defies; Keeps Variable Mortgage Rate Unch

By Sophia Rodrigues

     SYDNEY (MNI) - The last of Australia's big four banks National Australia

Bank has broken ranks with the other three by making no change to its variable

mortgage rate, a move that would provide some comfort to the Reserve Bank who

might have been exasperated with cartel-like behavior displayed by the first

three. 

     RBA Governor Philip Lowe can hope that rate differentials between banks

arising out of this would keep the mortgage market competitive and provide

interest rate benefits to households. 

     "I encourage anyone with a mortgage to shop around: there are some very

good offerings out there," Lowe said in a speech last week, in response to news

of some banks raising their mortgage rates in reaction to higher short-term

wholesale rates.

     On Monday, NAB announced it is leaving its variable home loan rate

unchanged for now, defying moves by the other three big four banks that raised

their variable mortgage rate by 14-16 basis points.

     NAB's move appears to be a strategy to build goodwill with customers that

has taken a hit in recent months following several revelations at the Banking

Royal Commission including overcharging customers. It may also be aimed at

attracting new customers.

     "We are listening and acting differently. We need to rebuild the trust of

our customers, and by holding our NAB Standard Variable Rate longer, we help our

customers for longer," NAB Chief Executive Officer Andrew Thorburn said in a

statement.

     "By focusing more on our customers, we build trust and advocacy, and this

creates a more sustainable business," he added.

     Interestingly, NAB hasn't dismissed the possibility of raising variable

mortgage rate later if pressure on funding costs continue. "NAB will continue to

regularly review its rates and assess whether current market conditions,

including funding costs, continue," Thorburn said.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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