The NAB today became the third major bank to raise home loan rates, citing added costs from meeting stricter new capital requirements to make banks safer from a financial crisis.
The bank increased its standard variable home loan rate for owner occupiers by 0.17 of a percentage point to 5.60%.
The move means more than two-third of Australians face increases in their mortgage payments from next month
The announcement today follows the Commonwealth Bank yesterday raising rates on owner-occupier mortgages by 15 basis points.
Westpac last week announced it was increasing its rates by 20 basis points.
Combined, the three banks have more than 65% of the home loan market.
NAB’s rates change is effective from November 12, eight days before Westpac and the Commonwealth.
The NAB’s says today’s announcement responds to market conditions as well as regulatory changes which require NAB to increase the amount of capital applied to residential mortgages.
NAB group executive for personal banking Gavin Slater says the bank carefully considered the decision to raise interest rates.
“There are a range of factors that come into consideration in interest rate decisions. The home loan market is dynamic, with multiple changes being seen across the industry,” Slater says.
“Regulatory changes on capital requirements also increase the costs associated with providing home loans. In May this year, NAB took early steps to strengthen our capital position by raising $5.5 billion to begin to address expected changes in capital requirements.
“Today’s decision has not been easy, but we believe this is right decision for the long term. We know we have to balance the interests of our customers with the needs of our more than 550,000 shareholders.
“Interest rates are at historically low levels and NAB remains committed to providing a competitive proposition for our customers.
“We appreciate that price is important, but we also know that customers want us to provide the right help and advice, the right products, and deliver innovative digital capability.”
There are no changes to fixed rates.