Tuesday, 25 March 2008
National Australia Bank today announced a change of 0.09% to its standard variable home loan interest rate, to 9.36% per annum. The new rate takes effect from Wednesday 26 March 2008.
NAB Executive Director and CEO Australia, Ahmed Fahour, said the change reflected the sustained increases to short and long term wholesale funding costs.
"Current wholesale funding costs are highly volatile and remain well above normal. Bank wholesale funding costs have risen above Reserve Bank increases, and the spread between the Australian 90-day bank bill rate and the cash rate has been substantially higher than the usual spread. Furthermore we have continued to issue in offshore markets for term funding at these substantially higher spreads, which leads to higher borrowing costs for businesses and mortgage loan customers," Mr Fahour said.
"NAB has been absorbing much of these costs on behalf of customers since August 2007. The true cost of funding a home loan is no longer reflected by the RBA cash rate, and because of the premium banks are paying in wholesale funding markets we have an ongoing responsibility to balance the needs of both our customers and shareholders. It is important that the price of mortgages reflects the true cost of funding in order to ensure that the Australian mortgage system continues to function well," Mr Fahour said.
Mr Fahour said NAB maintains its commitment to responsible lending and continues to take steps to help new home loan customers avoid financial stress.
“Before approving a home loan we take steps to help our customers understand the ongoing commitment of taking out a home loan, in order to help them avoid financial difficulties. We assess their capacity to regularly repay a loan, and look at how they may cope with any changes in their circumstances, as well as their ability to cope with changes to the broader economic environment.
"At present, over 90% of our home loans customers are ahead of their minimum repayment requirements.
“We also continue to offer a range of competitive fixed rate home loans for customers concerned about the prospect of future rate rises and, as announced in February, we are developing a new Clear home loan with no exit fees for customers wanting greater choice and simplicity in banking,” Mr Fahour said.
Effective from today, Tuesday 25 March, NAB has also increased deposit rates by 0.25% for all iSaver account customers; by 0.25% for Business Cash Maximiser customers with balances of $10,000 or more, and by 0.25% for NAB Farm Management Account customers across all tiers above $20,000.
Felicity Glennie-Holmes National Australia Bank Mobile: 0412 673 038
* The information contained in this media release is for media advice purposes only. The contents are true and correct at time of publishing/issuing, however may change over time. For further information about NAB products or rates, please go to Interest Rates, Fees & Charges