After a painful period of official and unofficial interest-rate adjustments working against the customer, National Australia Bank chief executive John Stewart has foreshadowed a time when the system could work in reverse, to the customer's benefit.
Mr Stewart yesterday added his voice to an increasingly popular view in the industry that the next movement in official rates could be down, but not until next year after clear signs emerge that the inflation battle has been won.
"What you might find then is that the Reserve Bank cuts rates by 25 basis points, and we reduce (mortgage) rates by 35 basis points,'' he said.
"That could happen.''
Since the beginning of the year, banks have raised variable mortgage rates in a series of moves by a total of almost 40 basis points, over and above central bank adjustments to cash rates.
The unilateral moves have been deeply unpopular in the mortgage belt, but the banks have defended the policy on the basis that profit margins would erode due to their higher funding costs from the global liquidity squeeze.
Mr Stewart said further rises independently of the RBA were unlikely, unless wholesale funding markets deteriorated again to the point where NAB was itself absorbing "painful'' cost increases. "But I don't think that will happen,'' he said.
