Ironic that in the past two weeks a number of smaller lenders, including Macquarie and Bendigio/Adelaide Bank all hiked their mortgage rates, the interbank rate has eased. A couple of weeks back it was above 32 basis points now its down to 25 basis points.
So does this mean the risk of mortgage rate hikes have also abated from the majors?
Not necessarily as according to the AFR today, investors are moving funds from deposits to offshore locations. The share of bank funding from deposits is falling, thus they will need “an estimated additional $70 billion of funding as superannuation funds shift out of cash into international assets while indebted households draw down on their savings”.
This additional funding is required to support continued mortgage loan growth.
The household savings ratio is also falling thanks to the need to service mortgage repayments.
The AFR concludes “The banks faced two choices in response to slowing deposit growth – either lift deposit rates, or increase their use of the capital markets to meet demand for credit as their loan books have swelled to $2.6 trillion”.
“Either measure should result in higher cost of bank funding”
So still pressure to lift mortgage rates then.
They’ll have to go up, now O/S investors know they’ll been sold dud RMBS’s from a criminal cartel – https://www.zerohedge.com/news/2018-07-13/it-hit-mortgage-market-over-head-baseball-bat
If some of the writing I’m seeing comes true how will 40% deposits to buy any property go when added to complete understanding at how Superannuation works?
The Royal Commission is looking at Super and I note the media blackout is in effect already, how bad is it really?
Interesting times we live in.