National Australia Bank has announced increases to its variable home loan interest rates, months after it defied other banks over rising funding costs.
NAB announced that, effective Tuesday 31 January, it will lift its mortgage rates by up to 16 basis points.
NAB’s changes are as follows:
- An increase of 12 basis points on its owner-occupier principal and interest home loan, from 5.24 per cent to 5.36 per cent
- An increase of 16 basis points on its investor principal and interest home loan, from 5.80 per cent to 5.96 per cent
- An increase of 16 basis points on its owner-occupied interest-only home loan, from 5.77 per cent to 5.93 per cent
- An increase of 16 basis points on its investor interest-only home loan, from 6.25 per cent to 6.41 per cent
The bank’s chief customer officer – consumer banking, Mike Baird, said the bank sought to strike a balance between rewarding customer loyalty, shareholder outcomes, and responding to sustained increases in funding costs.
NAB's interest rate increase come after the bank announced last September that it would hold its standard variable rate for “as long as possible”, despite pricing changes from ANZ, the Commonwealth Bank and Westpac.
“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,” Mr Baird 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.
“We have been deliberate in our approach to limit the impact on owner occupier borrowers by keeping their rates as low as possible to encourage both new and existing customers to pay down their loan sooner.”
NAB’s move follows a 20 basis point rate hike by its subsidiary UBank, with the Bank of Queensland (BOQ)and Virgin Money also recently announcing increases, which marked the second wave of out-of-cycle rate changes.
Not all banks have raised their interest rates in recent months, however, with Commonwealth Bank-owned Bankwest actually cutting its rate for new owner-occupier loans by 16 basis points in early January.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.