Login
ISCOVER
Jessica Darnbrough
New research that suggests the cost of funds is falling could put pressure on lenders to pass on Reserve Bank rate cuts in full.
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.
Last night, Nine News reported that the Commonwealth Bank of Australia had raised $2 billion this week from overseas investors at a cost substantially lower than that incurred by the bank in 2012.
Moreover, Westpac recently sent a confidential note to its investor clients in which it described the fall in wholesale funding costs over the past year as “extraordinary”.
Speaking to The Adviser, Loan Market Group’s Mark De Martino said this recent drop in wholesale funding costs would ultimately put pressure on Australia’s lenders to pass on any Reserve Bank cash rate cuts in full.
“I have spoken to a few lenders of late and they have intimated that their costs of funds have dropped,” he said. “As a result, I think we should expect to see most if not all lenders pass on any rate cuts in full to borrowers.”
Mr De Martino then went a step further and said he wouldn’t be surprised to see some lenders even move out of cycle with the Reserve Bank.
If this happens, it would be the first time in a long time that any of Australia’s lenders have dropped their rates out of cycle with the RBA.
