National Reduces Business Rates
Last week we reported on the ANZ reducing its rates on its suite of business products and commented that now only the NAB was yet to move and we were expecting them to do so in the very near future.
Well today the NAB announced that it would be cutting the interest rates on its lending products for small and medium business for both new and existing customers effective 11th May 1998.
The changes are as follows;
Business Mortgage Overdraft 7.20% (reduced by 0.75% from 7.95%)
Business Mortgage Variable Rate 6.80% (reduced by 0.60% from 7.40%)
Business Mortgage 1 Year Fixed 6.50% (reduced by 0.40% from 6.90%)
Business Mortgage 2 Year Fixed 6.80% (reduced by 0.35% from 7.15%)
The 3, 4, & 5 year fixed rates remain unchanged.
With a 30% share of this segment of the market, their existing customer base of small and medium business will welcome these cuts. Not so the NAB’s competitors who will now have to also look at methods, such as more features and reduced fees, to entice customers across.
We are seeing a similar pattern emerging in business loans to what took place last year with home loans. First interest rates were cut substantially by a few and then ultimately matched by most. Once the pricing advantage virtually disappeared (together with a fair bit of the lenders margins) lenders looked towards features and fees as the next battleground on which to wage the war of attracting new and retaining existing borrowers. Also with new players, such as Super Members’ entering into the small and medium business sector of the market and increasing competition, we expect the promotion of new features and reduced fees to start to figure prominently in future advertising campaigns.