NAB commits to rate cut

by Rachel Seymour 21/08/2008

 Potential borrowers, take note.  In a surprise move, National Australia Bank have announced they will pass on the full effects of any forthcoming interest rate cut by the Reserve Bank.  NAB are the first major bank to make this promise and there is now pressure on all other big banks and lenders to follow suit and lower their home loan interest rates.

Last month Commonwealth Bank lowered it's fixed rate mortgage by 25 basis points, and just hours after the NAB's announcement, the bank again lowered their fixed rate even further.

NAB say they have committed to the decision because of an improvement in financing costs.

"While we continue to see volatility in international markets and increases in the average cost of long term funding, we have experienced some short term funding relief which we are keen to pass on to our customers,'' said Ahmed Fahour, chief executive of NAB Australia, the group's domestic banking business which is responsible for fixing its home loan costs.

 

It is widely tipped that the RBA will cut official interest rates by 0.25% when it meets next month, however, all the major banks have been shy to say whether they would pass on the cuts to borrowers.  With the NAB finally announcing that they will pass on the cuts, many borrowers will start to breathe a sigh of relief.

But while any cut in home loan interest rates is welcomed, Mr Fahour was keen to point out that NAB was only committed to one rate cut following the RBA's September decision, and would have to consider any possible further reductions carefully.
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source: Sydney Morning Herald
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