Following the Reserve Bank of Australia's increase in the official cash rate imposed earlier this month, National Australia Bank has lifted its standard variable home loan rate by nine basis points to 9.36 per cent, sighting the volatility and increased costs of short as well as long term wholesale funding as the driver behind its latest rate rise.
Ahmed Fahour, NAB's Australian head, blames constant increases to a range of funding costs.
"Bank wholesale funding costs have risen above Reserve Bank increases, and the spread between the Australian 90-day bank bill rate and the cash rate has been substantially higher than the usual spread."
"Furthermore we have continued to issue in offshore markets for term funding at these substantially higher spreads, which leads to higher borrowing costs for businesses and mortgage loan customers."
Mr Fahour says NAB has absorbed much of the higher borrowing costs instead of passing this on to customers, but concedes the banks has to please both customer needs and shareholder needs. NAB's new standard variable home loan rate of 9.36 per cent takes effect on Wednesday, March 26.
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