NAB revives competition between banks
By
Andrea Lavigne
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4/12/2009 9:20:00 AM
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NAB has thrown down an open challenge to Westpac by raising rates in step with the Reserve Bank of Australia, but well below its rival.
The ploy to woo customers from Westpac could upset the "four pillars, two stumps" policy that has seen Westpac and CBA take the lions share of home lending over the last 12 months.
Westpac announced on Tuesday it would raise rates on standard variable mortgages by .45% - almost double the RBA's decision to lift the official cash rate by 25 bps.
The move was slammed by Treasurer Wayne Swan who warned the bank there would be consumer backlash against the rate rise.
The remaining major lenders - ANZ, CBA and NAB seemed content to let Westpac take the heat, but were expected to announce similar rate rises to meet the challenge of rising funding costs.
NAB's decision to raise rates in lock-step with the RBA was a clear signal to its competitor that it hopes to take over some of the customers disgruntled with Westpac's rate decision.
Swan cheered NAB's strategic move, urging the other banks to follow its lead.
NAB's decision is unique when one considers the banks have moved in unison to respond to previous RBA movements.
Banks have also stepped up their fight for deposits. Westpac is offering rates up to three percentage points above the official cash rate on some term deposits, while NAB's U-Bank product pledges to match its rival.
Related stories:
NAB lifts rates 25 bps - NAB announced it will increase interest rates on standard variable mortgages by 25 bps, on par with the Reserve Bank of Australia's rise earlier this week.
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Robert Kaya on
08 Dec 2009 12:03 AM
Of course Westpac will increase their rate.They are now poaching the experinced managers of the other banks.And they MUST make them an offer that they cannot refuse.And the funds must come from somewhere!