NAB is keeping variable mortgage rates on hold in an effort to curry favour with customers, resisting the temptation to follow its rivals in passing on increased funding costs.
Chief executive Andrew Thorburn on Monday said National Australia Bank will continue to monitor funding conditions, but will continue to hold its standard variable rate at 5.24 per cent.
Westpac, Commonwealth Bank and ANZ have over the past two weeks said they would raise their standard variable rates for owner-occupiers to 5.38, 5.37 and 5.36 per cent respectively.
Mr Thorburn indicated that 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,” Mr Thorburn said.
“By focusing more on our customers, we build trust and advocacy, and this creates a more sustainable business.”
The out-of-cycle hikes by NAB’s rivals drew criticism from customers and politicians, with Prime Minister Scott Morrisson weighing in to encourage unhappy borrowers to switch providers.
The prime minister on Monday tweeted his approval of NAB’s decision.
“Good call by @NAB not to lift mortgage rates. They seem to get it.”
NAB’s share price, however, seemed to suggest investors were thinking about a lost opportunity to boost margins.
NAB shares were down about 0.6 per cent in afternoon trade, compared to a slight gain for CBA and declines of about 0.2 and 0.35 per cent for ANZ and Westpac.
The other lenders’ out-of-cycle moves 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 even longer than previously thought.
The RBA, which has not moved on rates since August 2016, would be wary of increasing the load on borrowers – and decreasing the amount they can spend elsewhere in the economy – and could even cut the cash rate if the banks hike further, AMP chief economist Shane Oliver said.