The National Australia Bank (NAB) is receiving heavy criticism for its decision to raise its interest rates yesterday, just hours after the US Federal Reserve raised its interest rates.
The NAB raised its residential investment home loan variable rate by 25 basis points from 5.55% to 5.8% per annum. They also raised their standard variable rate for owner-occupiers from 5.25% to 5.32% per annum. These changes have received heavy criticism, including from Prime Minister Malcolm Turnbull.
In an interview with Network Seven, Turnbull commented on the rate rise.
“It is certainly not welcome, but as you know, the banks obviously have to manage their own affairs, and they have funding costs,” said the Prime Minister.
Cabinet Minister Christopher Pyne responded to the NAB’s decision by encouraging Australians to shop around.
“It is not nearly as hard to move banks as people think it is,” Minister Pyne asserted.
The decision has also received condemnation from the other side of politics, with Labor MP Anthony Albanese calling NAB out of touch during an interview.
“I think there is no excuse for them to be putting up interest rates when the Reserve Bank haven’t. They’re using the US increase as an excuse and I think it is just another example of the banks being out of touch,” said Mr Albanese.
In a statement released announcing the changes, NAB Chief Operating Officer Antony Cahill said that increasing costs, regulations, and competition are the reasons for the rate increase.
“The difference between what we charge and how much it costs us to fund a mortgage remains under pressure, with intense competition, increasing regulation, and elevated funding costs,” Mr Cahill said. “The decisions we make on interest rates are difficult ones, and we want to assure our customers we do not take them lightly as we seek to achieve the right balance for all our stakeholders while considering the dynamic financial and economic environment in which we operate”.
There is currently no word on whether the other banks will follow the NAB and raise their interest rates.