NAB has finally joined its big four rivals in hiking variable mortgage rates, citing funding costs and shareholders.

NAB had for months resisted following Commonwealth Bank, Westpac and ANZ in imposing out-of-cycle rate hikes – citing a desire to reward customer loyalty and build trust – but on Thursday said it was raising standard variable rates for owner-occupiers and investors.

From January 31, NAB will lift its standard variable rate for owner-occupiers repaying principal and interest by 0.12 percentage points to 5.36 per cent – the same as ANZ but lower than CBA and Westpac, at 5.37 and 5.38 per cent respectively.

The bank’s owner-occupier interest-only rate and all investor rates will rise by 0.16 percentage points.

Mike Baird, the bank’s consumer boss, said NAB was balancing its goal of rewarding loyalty with the need to satisfy shareholders and respond to increased funding costs.

The move will add $22 a month to the principal and interest repayments on a $300,000 owner-occupier home loan over a 30-year term.

“Our decision to hold our standard variable rate since September last year, the only major Australian bank to do so, has led to around $70 million remaining in the households of more than 930,000 NAB customers,” the former NSW premier said.

“We wanted to reward our existing customers for their loyalty and held off as long as we could despite being subject to the same increasing wholesale funding costs and market pressures as other major lenders.”

Westpac sparked the round of rate increases in August, citing funding pressures even though the Reserve Bank has kept the cash rate at a record low 1.5 per cent since August 2016.

Growing numbers of economists are predicting the Reserve Bank will cut the cash rate further before the end of the year to try to stimulate consumer spending. That could put public and political pressure on banks to reduce rates.

NAB’s acknowledgement of shareholders comes a month after more than 80 per cent voted against the bank’s remuneration report following a year in which annual cash earnings fell 14.2 per cent.

The bank’s move also hit the Australian dollar, which lapsed to 71.28 US cents after the announcement.

NAB’s move is seen as another blow to a housing market already suffering the steepest fall in home prices in two decades and a slowdown in new building.

Such weakness is one reason investors have moved to price in a real chance of a cut in interest rates this year, even though the Reserve Bank of Australia has long argued the next move will be higher.

-AAP