Westpac May Go for a Softer Approach to Mortgage Pricing

One of the largest banks of Australia, Westpac Banking Corporation (WBC) may go for softer approach to the mortgage pricing in case the Reserve bank of Australia (RBA) decides to raise interest rates tomorrow when it meets. Although the banking giant has continued to get squeezed due to the funding costs, it is expected to go for a "middle of the road" approach for pricing interest rates across the board. Westpac is making necessary adjustments to regain its positive image after facing severe political and customer scrutiny as the bank went for a considerable amount of rise in its interest rate on mortgage during the month of December. The initiatives taken by the bank might lead towards a rise in interest rate which will either match or remain in at just a few basis points over any change made by the Reserve Bank.

National Australia Bank (NAB), another major banking institution has already created considerable amount of pressure over its competitors with Lisa Gray, the retail head of NAB stating that the bank has no plans to raise interest rates above any decision made by the Reserve Bank. It is to be mentioned that National Australia Bank was the only bank which moved its interest line with RBA during December and is looking forward to boost its mortgage book. According to most economists, RBA might consider increasing the interest rates by as much as 25 basis points to 4 percent during its meeting on Tuesday in an attempt to keep a check on the inflationary pressures.

Rob Coombe, the new senior executive of Westpac is likely to take his first major decision when he will deal with the pricing on mortgages. Mr. Coombe is expected to take the charge of the flagship retail and small business banking unit of Westpac this morning replacing Peter Hanlon. Mr. Hanlon is expected to take the job of overseeing the technology and human resources operations of the bank. Westpac increased its interest rates on mortgages by as much as 45 basis points in the previous month, almost double the rise made by Reserve Bank rise in official interest rates.