did they put there interest rates up today, page-14

NAB lifts rates (The West)

25th March 2008, 15:15 WST



National Australia Bank has hiked the interest rates on its standard variable home loans by another nine basis points to 9.36 per cent.

NAB’s latest rate rise comes almost three weeks after it became the the first of the big banks to pass on the increase in the official cash rate imposed by the Reserve Bank of Australia (RBA) this month.

In the first week of March the RBA lifted the official rate by 25 basis points to 7.25 per cent.

NAB then lifted its standard variable rate by 29 basis points but warned it may have to lift rates again.

NAB’s Australian head Ahmed Fahour said today’s rate hike reflected sustained increases to short and long term wholesale funding costs.

“Current wholesale funding costs are highly volatile and remain well above normal,” Mr Fahour said in a statement.

“Bank wholesale funding costs have risen above Reserve Bank increases, and the spread between the Australian 90-day bank bill rate and the cash rate has been substantially higher than the usual spread.

“Furthermore we have continued to issue in offshore markets for term funding at these substantially higher spreads, which leads to higher borrowing costs for businesses and mortgage loan customers.”

Mr Fahour said NAB had been absorbing much of the higher borrowing costs on behalf of customers since August 2007.

“The true cost of funding a home loan is no longer reflected by the RBA cash rate,” Mr Fahour said.

“And because of the premium banks are paying in wholesale funding markets, we have an ongoing responsibility to balance the needs of both our customers and shareholders.

“It is important that the price of mortgages reflects the true cost of funding in order to ensure that the Australian mortgage system continues to function well.”

NAB’s new rate takes effect from tomorrow, March 26.