As promised, the mortgage discounts are getting the chop, from News:
NAB is finally increasing its interest rates — but only for new borrowers.
On Monday, NAB announced it would be changing the special offer on its base variable rate, available for new owner occupier principal and interest customers, from 3.69 per cent to 3.87 per cent.
The change, which comes into effect from this Friday, November 9, reduces the discount on the advertised rate from 48 basis points to 30 basis points. It will only affect new customers taking out the product.
The announcement comes nearly two months after the fourth-largest lender said it would not join the rest of the Big Four in raising mortgage rates in a bid to “rebuild trust” with customers.
NAB announced last week:
The decision by NAB chief executive Andrew Thorburn to stop chasing new business with aggressive discounts and to reward loyal customers has put the bank in uncharted territory after delivering a result that revealed further deterioration in its net interest margin.
…”The discount for the standard variable rate has continued to go up and up and up and up and so as the housing cycle has slowed that increases the pace and increases the intensity, it’s been a long-term trend and its got worse in the last two or three years,” Mr Thorburn said.
…NAB’s results however show the bank’s net interest margin – the difference between the rate at which it borrows and the rate at which it lends – fell to 1.84 per cent from 1.87 per cent in the first half and 1.88 per cent year on year.
RBA indicator mortgage rates suggests NAB could hike twice more to meet its intention of dropping the discount:
BBSW suggests the need for more as the margin squeeze keeps getting worse the longer it doesn’t fall back to the cash rate:
It’s very defensive stuff by NAB, clearly focused on customer retention over acquisition. Such does not bode well for credit growth.
