National Australia Bank has defended its decision to lift interest rates, arguing it had shielded its "loyal customers" from its own rising costs for as long as it could.

On Thursday, NAB lifted its home loan rates, citing sustained increases in wholesale funding costs, for standard variable loans by 12 basis points to 5.36 per cent.

NAB consumer boss Mike Baird. Credit:Louise Kennerley

The increase is effective from January 31, the day before Kenneth Hayne is due to hand down the final report of his royal commission into the financial services system.

NAB chief customer officer consumer banking Mike Baird said the rate hike decision was in response to sustained increases in wholesale funding costs.