 Mortgage rate increases hang in the balance
National Australia Bank are speaking out over interest rates, saying they will not confirm if future increases will exceed the Reserve Bank increases. Chief executive Cameron Clyne said the bank will always look to offer competitive interest rates on loans but declined to guarantee the strategy for future rate rises.
He said NAB has "no immediate plans" to move outside of the Reserve Bank's latest move.
"The commitment we give is that we'll be competitive," Mr Clyne told reporters after unveiling the bank's full year 2009 profit result.
Sir Ralph Norris, CEO of the Commonwealth Bank of Australia, has already commented that he does not expect the Big Four to raise rates more than the Reserve Bank increases to official cash rates.
When the Reserve Bank met for their October policy meeting, the official interest rate was raised 25 basis points. All the major banks followed with a hike on mortgage rates by the same amount.
Now fears are growing that the Big Four may move to increase mortgage rates higher than the increases set by the RBA.
Official rates are forecast to rise by another 25 basis points on Melbourne Cup Day and all eyes are on the banks to see how much they increase home loan rates by.
NAB posted a 42.9 per cent fall annual profit to $2.589 billion to September 30 after bad debt charges surged to $3.8 billion.
Mr Clyne said the bank's view was that the official cash rate, currently at 3.25 per cent, may settle 200 basis points below the top of the last cycle - at 5.25 per cent.
National Australia Bank holds the smallest share of home loans with 14.4% as of June 30.
Commonwealth Bank remains the nation's largest bank holding a market share within home loans of 24.4 per cent at June 30.
When the RBA was cutting rates during late 2008 and early 2009 the major banks were
criticized for not passing on the full rate cuts to borrowers.
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