NAB not feeling mortgage arrears pinch
(14 June 2011 – Australia) National Australia Bank (NAB) is not feeling the pressure from a rising level of mortgage arrears currently hitting the country according to personal banking boss Lisa Gray.
NAB stood alone in last month's interim profit reporting season when it said it had not experienced the same run-up in delinquencies as rivals ANZ and Westpac, or Commonwealth Bank in its March quarter trading update.
Ms Gray said despite NAB leading with the industry’s lowest variable rate home loan for the past two years, she is still "very comfortable" with arrears rates in 2009 and 2010 mortgage vintages.
'They're still performing where we'd expect them to be, and I put that down to a few things,' she said. 'First, we have risk-based pricing, so applications with a loan-to-valuation (LVR) of less than 75 are well priced and applications above 85 percent attract a slightly higher price, which means we get a higher proportion of lower-risk business.'
NAB was also benefiting from a consistent approach to pricing, whereas other banks tended to adjust their rates from customer to customer.
'We're finding that many customers are asking why they had to threaten to leave before they were offered a better deal,' Ms Gray said.
Ms Gray said that, although the mortgage market was starting to slow, NAB was still growing at three times the average of its competitors. Growth in the lower-margin broker channel was even higher at five times the banking system.
So far this year, Westpac had refinanced A$539 million of NAB home loans compared with A$471 million going the other way.
Ms Gray said despite NAB leading with the industry’s lowest variable rate home loan for the past two years, she is still "very comfortable" with arrears rates in 2009 and 2010 mortgage vintages.
'They're still performing where we'd expect them to be, and I put that down to a few things,' she said. 'First, we have risk-based pricing, so applications with a loan-to-valuation (LVR) of less than 75 are well priced and applications above 85 percent attract a slightly higher price, which means we get a higher proportion of lower-risk business.'
NAB was also benefiting from a consistent approach to pricing, whereas other banks tended to adjust their rates from customer to customer.
'We're finding that many customers are asking why they had to threaten to leave before they were offered a better deal,' Ms Gray said.
Ms Gray said that, although the mortgage market was starting to slow, NAB was still growing at three times the average of its competitors. Growth in the lower-margin broker channel was even higher at five times the banking system.
So far this year, Westpac had refinanced A$539 million of NAB home loans compared with A$471 million going the other way.
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