NAB Will Pass on Interest rate Drop

Published: August 24, 2008 - 11:24 PM

NAB makes their home loan comparison look good!

By Amanda Edmonds

The National Australia Bank (NAB) announced on Thursday that it plans to fully pass the benefits of the expected interest rate cut later this year. In an unusual step, it became the first of the major banks to promise to pass on any reduction, placing pressure on the other major banks to follow suit.

The Federal government and the Reserve Bank has recently criticised the major banks, for cashing in on consumer’s pain. While the official cash rate has increased significantly compared to last year, the banks’ rate rises have exceeded these. The move by NAB follows speculation that the Reserve Bank will soon reduce the cash rate, with its policies effectively reigning in the high inflation being experienced.

Until now, the major players including Commonwealth, ANZ, Westpac and St George, have been reluctant to guarantee any rate reduction will be passed on to consumers. This step taken by NAB means that compared to the other major banks, NAB will bring relief to homeowners and ease to the strain on household budgets. Ahmed Fahour, Chief Executive of NAB Australia said ''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.”

This move by the NAB will relieve the pressure off families who have NAB mortgages compared to any homeowners with home loans from the other leading banks. It will also give other consumers with home loans the chance to shop around for the cheapest interest rate and the best mortgage. And unless Westpac, the Commonwealth, St George and the ANZ follow the NAB’s lead and drop their interest rates, their home loans are likely to look like a much better home loan deal compared to their competitors.

Consumers need to be aware of the dynamic and unpredictable nature of the economy and that it is possible by doing price comparisons, such as home loan comparisons and they can possibly save hundreds on their living costs. Having the cheapest prices, as well as the best suppliers is one step that can help consumers save money – on everything from home loans to other household costs such as electricity and gas. Utilising the services offered by ShopAround.com.au in comparing prices can only help in the search for cheaper gas and cheap electricity.

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