Bank's ads sway unknowing customers



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March 23, 2011

Just one month since launching an advertising campaign designed to distance itself from the other major banks, National Australia Bank (NAB) has had a surge in account applications.

Home loan enquiries soared by more than a third since the campaign was rolled out on February 14 and the number of customers from other banks applying to refinance increased by 45 percent, NAB CEO Cameron Clyne said.

While the ads seem to be gaining traction for the bank, NAB still holds the smallest share of the big four’s home loan market behind Westpac, Commonwealth Bank and ANZ, Australian Prudential Regulation Authority’s January data reveals. Westpac topped the group with $188.7 billion on the books, ahead of Commonwealth Bank with $171.1 billion, followed by ANZ with $111 billion and NAB with $107.9 billion.

How do the major banks stack up?
It’s true that NAB’s home loan rates are generally the lowest of the big four and with one of its top variable rate home loans at just 7.14 percent, the Choice Package Tailored Home Loan is also below the market average for standard variable rates.

Looking across the four major banks at a $300,000 variable rate loan for 30 years, one of the next most competitive rates is offered by the Commonwealth Bank. Its Wealth Package standard variable rate home loan is 7.16 percent, as is one of ANZ’s top home loans, the

Breakfree Variable home loan. Westpac’s Premier Advantage Rocket Repay Home Loan is one of its best with a rate of 7.17 percent.

Save $16,500 by checking out the competition
But don’t be fooled into thinking that NAB has the cheapest rate on the market, simply because it has the lowest rate amongst the big four banks. In fact NAB’s Choice Package Tailored Home Loan doesn’t even get a mention in RateCity’s list of 60 low-interest mortgages.

Coming in at position 64, the NAB home loan rate is well above one of RateCity’s top home loans with Pacific Mortgage Group‘s Variable mortgage rate at just 6.74 percent on a $300,000 loan over 30 years.
In dollar value, minimum monthly repayments on the NAB loan will set you back more than $45 more than the Pacific Mortgage loan mentioned above. That equates to more than $550 annually and more than $16,500 over the life of the loan.

Clearly, it’s easy to be lulled into thinking that a bank’s rate is the best available, when it is backed by such compelling advertising messages. But it pays to shop around because comparing rates and also fees to find big-dollar savings, is always a better option than listening to advertising on TV.

 

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