NAB gives up its mortgage pricing advantage

National Australia Bank's decision to cut its standard variable mortgage rate by 20 basis points means it no longer offers the lowest SVR among the big banks - a point of difference it has used in its marketing since the launch of its Break-up strategy in 2011.

The Break-up campaign was NAB's bid to differentiate itself from the other big banks and build some share in retail banking - an area where it was underweight.

The campaign featured the introduction of fee-free transaction banking, the removal of exception fees and a home loan rate that was about 20 basis points below its peers.

In terms of increasing home loan market share the campaign worked well. At the outset NAB grew its home loan book at more than 1.5 times system.

Over the years the interest rate gap narrowed but NAB was still able to grow its book above system.

Following yesterday's announcement, NAB's standard variable rate will fall to 5.43 per cent. From Friday ANZ will be offering an SVR of 5.38 per cent. CBA's rate is falling to 5.45 per cent. Westpac will cut its SVR by 22 bps, offering a rate of 5.48 per cent from May 18.

Since 2011 NAB has increased its mortgage market share from 15.1 per cent to 16.8 per cent. It is still well short of the market leaders - CBA with more than 26 per cent and Westpac with 25 per cent.

With this move the bank's new chief executive Andrew Thorburn has made clear that margins are the priority ahead of market share growth.

NAB will report its half-year result later today.