Timid NAB leads on home loan rates

The emerging theme in the pricing decisions of lenders on their variable rate home loan products is that the pricing, once almost uniform on the headline rates, will be increasingly variable.

National Australia Bank yesterday added four basis points to the cash rate rise of 25 basis points and lifted its standard home loan rate to 9.27 per cent effective from today.

It is only a week and a half since the bank's CEO John Stewart was giving interviews suggesting the bank was unlikely to lift mortgage rates by more than cash rates.

As retail banks, unlike many niche lenders, have yet to fully adjust home loan rates to reflect the steep rise in spread between cash rates and bank bill yields, there's every chance other lenders won't be as timid as NAB.

St George Bank chief executive Paul Fegan said at yesterday's investor briefing that if the bank was to recover the full increase in the cost of funds since it last put up standard variable home loan rates, it would have to add 15 basis points to the 25 basis point increase in the official cash rate announced this week.

Fegan said credit card and margin loan repricing was moving in line with funding costs. Two thirds of commercial loans were priced off the bank bill rate and were repriced automatically.