Login
ISCOVER
Staff Reporter
While the Reserve Bank of Australia has voiced its support for the majors' recent out of cycle rate hikes the central bank has now indicated that funding costs have largely been recovered.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
At an investment conference earlier this week, the RBA’s assistant governor Guy Debelle said funding costs had risen by approximately 120 basis points since 2007, forcing lenders to recoup these costs in one way or another.
In February this year all four of the majors lifted their mortgage rates independently of the RBA.
But while Mr Debelle publically backed the controversial move by the majors, he said the February rate movements are the last we should see for a while.
“The bulk [of funding costs] had been recouped through lending rates,” Mr Debelle said.
“Term deposits are a major driver to the costs of the banks funding books and that’s where the cost pressure has come from.”
As such, Mr Debelle said it was impossible to guarantee the majors would not move out of cycle again in the future.
“Whether that manifests itself in narrower margins or whether you are able to pass it through lending rates, that’s a decision that the private banks take which is difficult for us to forecast.”
