(Updates with competitors’ cuts in second paragraph.)
Nov. 2 (Bloomberg) -- National Australia Bank Ltd. reduced interest rates by less than the central bank trimmed benchmark borrowing costs, eroding a discount to rival lenders that it has used to boost its share of the mortgage market.
National Australia Bank, Australia’s fourth-largest lender, said it will reduce its variable home-mortgage rate by 20 basis points after the Reserve Bank of Australia, the central bank, cut the nation’s key interest rate by a quarter of a percentage point yesterday. Its three larger competitors -- Commonwealth Bank of Australia, Westpac Banking Corp. and Australia & New Zealand Banking Group Ltd. -- all matched the central bank’s move.
More than nine out of 10 Australians who borrow to buy homes have variable-rate mortgages, making them vulnerable to interest-rate fluctuations. National Australia Bank, which started the most recent price war in 2009, is still offering the cheapest standard variable mortgage rate of 7.47 percent as it vies to win business in a market where home prices are falling.
Melbourne-based National Australia Bank attacked competitors in 2009, when it increased its variable home loan rate at a slower pace. The bank, which also led rivals in scrapping some banking fees, has had the lowest standard variable mortgage rate for more than 28 months, it said in a statement today.
Last week, National Australia Bank said profit rose 31 percent to A$2.79 billion ($2.9 billion) in the six months to Sept. 30 as it increased mortgage lending growth at triple the pace of the overall home loan market. The bank’s net interest margin, a measure of the profitability of its lending business, widened to 2.28 percent from 2.23 percent in the half year to March, it said on Oct. 27.
--Editors: Malcolm Scott, Linus Chua
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