NAB, Commonwealth to lift mortgage rates
National Australia Bank has announced it is following the lead of other major lenders and will lift its interest rates by 0.09 percentage points.
It follows the Commonwealth Bank's announcement earlier today that it will lift the rate of its standard variable mortgage rate by 0.10 per cent.
The Reserve Bank decided to leave the official cash rate unchanged last week.
NAB is under pressure to keep its rates low after promising to have the lowest standard variable home loan rate of the big four banks for the rest of this year.
The Commonwealth's increase, which will come into effect on February 20, takes the bank's standard variable mortgage rate to 7.41 per cent.
The bank also will raise the rate for its six-month term deposit by 0.20 per cent.
Commonwealth Bank retail banking services executive Ross McEwan says the official cash rate is just one factor in the bank's total funding costs, and the bank has seen a sustained increase in outlays for both wholesale and deposit funding.
"The Commonwealth Bank believes Australian banks should continue to price sensibly, taking into account factors both on and offshore, rather than experience similar problems to those that many banks overseas have experienced," Mr McEwan said.
"We also believe that we need to balance the needs of all of our customers by providing competitive pricing across all products.
"Whilst we understand that any increase in interest rates is not favourable to borrowers, our millions of deposit customers are favoured and since the commencement of the GFC we have seen significant competition in retail deposits pricing." Last week, ANZ raised its rate by 0.06 per cent to 7.36 per cent and Westpac lifted its rate by 0.10 per cent to 7.46 per cent.
National Australia Bank is yet to announce its decision.
'Restoring balance' Meanwhile, several smaller banks have announced the result of their reviews, with Bendigo and Adelaide Bank lifting its standard variable rate by 15 basis points to 7.45 per cent from February 21.
Bendigo and Adelaide Bank managing director Mike Hirst says banking margins are unsustainable as funding costs continue to rise, and balance must be restored.
"This is not a popular move, we know that, but it is the right thing to do to restore a proper balance between depositors, borrowers, the bankâs shareholders and our community partners," Mr Hirst said in a statement.
"At current funding cost levels that balance is out." But ME Bank says it will leave its standard variable rates steady.
Chief executive Jamie McPhee said the bank was committed to balancing the needs of its shareholders and its customers.Â
"Raising interest rates in a declining rate environment is a clear signal that the major banks are looking to place the full financial burden of the higher cost of funding onto their customers," Mr McPhee said in a statement.
"With the entire banking sector facing higher funding costs, a fairer outcome is to share the impact between customers and shareholders." Federal Treasurer Wayne Swan says by the end of the year there should be a million mortgages without exit fees.
Mr Swan has repeatedly urged bank customers to switch if their institution lifts interest rates and says Government policies have made it easier to do so.
