The Gillard Government appears to be taking credit for National Australia Bank’s recent move to sell discounted mortgages online. NAB announced yesterday it is offering standard variable rate mortgages more than 1 per cent lower than most competitors. The bank’s promo, which lasts until the end of this month, sees all standard variable rate mortgages sold online priced at 6.59 per cent.

To this, Treasure Wayne Swan quickly released a statement claiming the pricing war between Australia's big banks has continued to intensify since December last year when the government acted to boost banking competition.

According to him, “The government's actions mean banks that try to take their customers for a ride can expect to be punished by losing customers, and banks that offer the best value can expect to be rewarded with new customers walking through their doors.”

Mr Swan said the government is introducing three broad streams of reform to empower consumers to get a better deal, to help smaller lenders put more competitive pressure on the big banks, and to secure our financial system so it can continue to provide a sustainable flow of credit to households and businesses.

“These reforms build on the government's decisive action during the global financial crisis to secure our financial system and preserve the competitive foundations of Australia's banking sector.”

Mr Swan said “vigorous competition is the best way to create a system that offers real choice for consumers, and we're already seeing strong evidence of competition getting Australians a fairer go in banking.”

The NAB is now undercutting its major bank competitors by over a full percentage point on mortgages through its online UBank channel. This represents a potential saving for a family with a $300,000 mortgage of up to $245 a month or $2,942 a year in repayments if they switch from another big bank, Mr Swan said.