Most feast on billion-dollar kill

Commonwealth Bank walks away with the richest share of the pickings from the last fortnight's banking feast - one that, at a click of the wrist, delivers a notional addition to profit of $1.1 billion a year to Australia's five largest banks, in the form of increased margins on home loans.

The five top banks account for 79 per cent of all home loans, or $900 billion out of a stock of $1.14 trillion.

CBA layered 20 basis points on to its home loan margin, worth $590 million to the bank if applied to 80 per cent of the bank's loan book (and which allows for fixed rate loans, discounted loans and so on).

Westpac and NAB will each extract another $220 million in annual profit. ANZ follows with $170 million. And Bendigo Bank lifts its profit by $21 million.

CBA's four followers picked price increments (on top of the RBA rise of 25 basis points) ranging from 10 bps for Westpac and Bendigo, to 14 bps for ANZ and 18 basis points for NAB.

NAB, Westpac and Bendigo moved last of the five largest banks, on Friday.

National Australia Bank cited past and expected rises in funding costs as its rationale for nudging its own margins and raising its variable home loan rate by 43 basis points.

NAB made much of its discounted position in the home loan market for 17 months, and looks about to absorb the cut in margins, but explained that this stance could not continue "forever".

The bank disputes Reserve Bank of Australia and Treasury analyses that question the banks' position that they face increasing funding costs.

Westpac, having taken the price lead a year ago with its own increment of 20 basis points, this time added 10 bps. Bendigo and Adelaide Bank copied this price point as well.

Of third-party funders, NAB's Advantedge division also lifted home loan margins by 18 basis points, so plenty of smaller mortgage brands will have to share the bank-rate pain with their customers.

Lesser funders have yet to reveal their pricing.

Some funders are willing to play a discounted game for favoured introducers.

LJ Hooker, for instance, is one mortgage manager promising to fix rates until February 2011.

Gateway Credit Union is also supporting Yellow Brick Road with discounted pricing.

So far, it is the larger credit unions and building societies, as well as ME Bank, which have limited rises in their home loan rates to 25 basis points.