NAB Embarks On Aggressive Mortgage Lending Strategy

Post by NeilMc on December 10, 2009 · Under Australian Economy, Business News, Company News, banking, home loans, interest rates, mortgages · Comment

NAB, who last week exactly matched the increase in official interest rates with one of its own, the only major lender to do so, says it will review its interest rate policy before the central bank meets next February, and refuses to rule out further interest rate increase that match the higher rate increases of its rivals.

At the same time, NAB outlined an ambitious strategy of capturing market share from its rivals, unveiling its NAB on Wheels platform, which will provide mobile bank branches that will be strategically located near branches of rival lenders.

On Wednesday NAB positioned staff members outside rival Westpac’s flagship branch in Sydney, attempting to lure Westpac’s customers with its standard variable mortgage rate of 6.49 per cent.

Warren Shaw, NAB’s retail banking group executive said the lender would undertake a review of its interest rate policy over the upcoming months, with some analysts speculating that it may enact changes.

“We have the capacity to deal with as many customers as want to do business with us, this is not just about home loans, it’s credit cards and all financial services. We are comfortable with the pricing point and will be comfortable with that well into the New Year.” Mr. Shaw said.

NAB’s standard variable rate mortgage rate is 12 basis points lower than Commonwealth Bank’s 6.61 per cent interest rate, 20 basis points below ANZ’s 6.69 per cent interest rate and 27 basis points below Westpac’s 6.76 per cent interest rate.

NAB also has an introductory offer for one to three year home loans, that carry interest rates below 6 per cent.

“For us, it’s about more give and less take. We are taking a different position and we think it’s the right thing to do.” Mr. Shaw said.

Mr. Shaw says NAB’s marketing campaign is not aimed exclusively at Westpac, and rather it is an effort to expand its mortgage book, a business area that has given up ground over the last half year.

CBA’s and Westpac’s near total dominance of mortgage lending in the last year has largely been at the expense of their Big Four Rivals ANZ and NAB, who instead focused on other lending portfolios rather than mortgage lending.

The dominance of Westpac and Commonwealth Bank of Australia in the mortgage lending market has come at the expense of ANZ and NAB, which chose to grow other lending portfolios ahead of their mortgage portfolio.

“We are not targeting Westpac we are targeting the customers of other banks in general. We are saying we have a good deal.” Mr. Shaw said.

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