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NAB follows RBA with rate hike

NAB follows RBA with rate hike

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Date Published : Thursday, March 06, 2008

Australia's largest bank has increased the interest rates it charges on home loans as a result of the Reserve Bank's decision to hike up rates earlier this week.

On Tuesday (March 4th), the Reserve Bank of Australia (RBA) voted to raise interest rates for the second successive month, by 0.25 per cent to 7.25 per cent - a 12-year high.

Following in its footsteps, the National Australia Bank (NAB) has also increased the rates it charges on variable rate home loans, but not savings accounts or its credit cards.

As a result of this decision, the rate of interest charged on a home loan from the NAB is 9.27 per cent, an increase of 0.29 per cent.

NAB executive director Ahmed Fahour told news.com.au: "We have a responsibility to balance the needs of our shareholders as well as our customers.

"Unfortunately this means the increase in the RBA's cash rate by 0.25 per cent does not reflect the true cost of funding a home loan. Even with the additional 0.04 per cent change on variable rate products, NAB is continuing to absorb a significant portion of the increased wholesale funding costs."

The Australian Associated Press has reported that St George Bank is also mulling over whether to hike up the rates charged on its home loans, as a result of the RBA's decision.

St George chief executive Paul Fegan told the news agency that the bank would "think" about the consequences to customers before taking action.

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