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UBank pushes mortgage competition

UBank pushes mortgage competition

(24 May 2011 – Australia) National Australia Bank (NAB) has planned to use its internet banking business to sell deeply discounted mortgages in a bid to maintain sales growth in the face of a slowing mortgage market. Until the end of next month, NAB's UBank arm will be offering standard variable rate mortgages at 6.59 percent, although the discounted rate is only available to mortgages sold online.

Pricing at these levels represents more than a full percentage point below the current standard variable rate of most banks.

Rival Westpac has the highest mortgage rate in the market among the major players at 7.86 percent, while Commonwealth Bank (CBA) and ANZ are pricing variable home loans at 7.81 and 7.8 percent respectively. NAB's flagship brand will continue to sell loans at 7.67 percent.

In a sign non-bank players are starting to move back into the market, Aussie Home Loans earlier this month offered a variable rate of 6.69 per cent for home owners looking to refinance mortgages.

NAB launched its UBank business more than three years ago offering high-interest deposit accounts, although it has been trialling sales of mortgages since February.

NAB executive general manager of strategy Greg Sutherland said UBank has been able to price more aggressively than rivals, given it runs as a stand-alone business, without the need for costly infrastructure such as a branch network.

UBank's pricing in deposits and mortgages ''more fully reflects the economic benefits of the online model'', Mr Sutherland said.
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