Compare Credit Cards
- Credit Cards Home
- Balance Transfer Rate
- Low Interest
- No Annual Fee
- Reward Credit Cards
- Business Credit Cards
- Gold & Platinum
- Debit Cards
Compare Banking
Compare Loans
Compare Insurance
- Insurance Home
- Health Insurance
- Home Insurance
- Life Insurance
- Motor & Bike Insurance
- Travel Insurance
Investment Providers
Links
Australian Banks Need To Raise Rates Out Of Synch With Central Bank
A leading investment bank says that Australian lenders should raise their mortgage lending rate before the year is out, and need to do so independently of the interest rate cycle of the central bank.
This would soften the impact of rising funding costs, according to UBS analysts.
Australian lenders consistently cite the higher cost of funding on wholesale credit markets, as hurting their profitability.
Three of the four major lenders have not hiked their mortgage lending rates in excess of the RBA since December, when politicians began accusing them of being greedy.
“They potentially should look at increasing mortgage rates outside the RBA between now and Christmas,” head of investment strategy and consulting at UBS’s Australian wealth-management business, George Boubouras, said yesterday.
“That would be a prudent thing to do, from a shareholder perspective.”
Mr. Boubouras added that the lenders needed to raise their mortgage lending rates beyond the pace set by the central bank to maintain profitability and their margins.
Recently CBA in a presentation said that its funding costs have increased by 122 basis points since the global financial crisis, largely as a result of increased funding costs and higher deposit rates.
According to the RBA, domestic banks rely on offshore and local bond sales for 28 per cent and 19 per cent, respectively, of their total funding.
Compare Australian Home Loan Deals
Related posts
Comments
Leave a Reply