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While the housing Consumer Price Index rose by 0.8 per cent in the June quarter, the price of financial and insurance services have continued their downwards trend, The Australian Bureau of statistics has revealed (ABS).
According to the ABS the dropped 1.7 per cent in the three months to June.
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The financial and insurance services component of the CPI measures fees and charges on deposit and loan facilities, banks’ margins applying to household deposits and loans, commissions charged by stockholders and real estate agents, taxes on the transfer of real estate and the price of comprehensive insurance.
The biggest contributor to the decrease in the cost of financial and insurance services in the quarter was the price of deposit and loan facilities, which went down by 4.3 per cent, The Australian Financial Review reported.
“The gap between the mortgage rate and deposit rate has closed,” Macquarie Equities banking analyst Tom Quarmby said.
Banks are eager to raise funding through household deposits, meaning they have to keep their interest rates on deposits very competitive, costing them more. At the same time, they have passed on lower interest rates for mortgages. Hence their profit margins have shrunk.
