NAB has thrown down the gauntlet to other lenders after announcing it would not hike its standard variable home loan interest rate above any rise to the RBA’s official cash rate today.
NAB’s standard variable home loan interest rate is currently 6.49 per cent per annum – the lowest rate among the major banks.
In December 2009 – when the RBA last met – NAB was the only major bank not to move its standard variable home loan interest rate by more than the RBA's rise to the official cash rate.
Westpac chose to move 20 basis points above the Reserve Bank, creating a spread of 27 basis points between the majors.
This spread – which is currently the largest seen in over a decade – could expand further should some of the majors choose to lift rates above any RBA rate hike.
However Shane Oliver, AMP’s chief economist, believes all of the majors will move in line with the RBA.
“Westpac copped a lot of stick last [time] for moving well above the RBA, so I don’t believe they will do that again,” Mr Oliver told The Adviser.
“I think we will see all the majors try to remain low and out of the limelight. They are going to try and keep themselves off the front page of the paper.”
Mr Oliver said traditionally the majors have kept their rates fairly closely aligned and expected them to fall back into line with within the next six months.
“I don’t think the spread we see currently between the majors will last very long,” he said.