Bank profit margins will be crunched

Discussion in 'Property Market Economics' started by Gen-Y, 18th Oct, 2019.

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  1. Gen-Y

    Gen-Y Well-Known Member

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    https://www.smh.com.au/business/ban...-cut-sparks-margin-fears-20190703-p523td.html

    So the rates are going down, but borrowing isn't increasing. It isn't rocket science that their profit margins will be crushed.
    The big banks will resist every steps of the way to keep as much of the rate cut themselves and not pass it onto customers.
    Already watching this happening right infront of our eyes since the start of the RBA aggressive cuts from 1.5% to 0.75%.

    Cry me a river please! poor old banks not marking record profits year on year. :mad:
     
  2. Peter2013

    Peter2013 Well-Known Member

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    As long as it doesn't backfire. The banks obtain a lot of their funding from overseas (we have record levels of household debt), and if their credit ratings are impacted, then borrowing costs will rise and this will have to be passed onto mortgage holders.
     
  3. Gen-Y

    Gen-Y Well-Known Member

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  4. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Dont beleive this bank issued BS for a moment

    A 25pt spread at 3.5% is far greater than at 10%. Banks make a margin on their costs of funding. The lower the rate the more it magnifies.
     
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  5. paulF

    paulF Well-Known Member

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    Banks Offshore funding costs:

    Long term Offshore @ 10%
    Short term Offshore @ 8-9%

    https://www.rba.gov.au/publications...-funding-costs-and-lending-rates.html#graph-3
     

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