Can you see banks raising interest rates?

Looks like those who took up the loans.com.au offer back in June 2011 which guarantees rate movement to be in line with RBA's cash rate (for the first 5 years) will be laughing now. Compared to NAB for example, loans.com.au rate (as per that offer) would have given the borrower an additional 14 basis point saving, since June 2011.
 
Looks like those who took up the loans.com.au offer back in June 2011 which guarantees rate movement to be in line with RBA's cash rate (for the first 5 years) will be laughing now. Compared to NAB for example, loans.com.au rate (as per that offer) would have given the borrower an additional 14 basis point saving, since June 2011.

Do you reckon they have some form of insurance against funding costs escalating. Just thinking about what happened in GFC to some of the non banks ie GE, Wizard, old Rams etc etc.
 
Looks like those who took up the loans.com.au offer back in June 2011 which guarantees rate movement to be in line with RBA's cash rate (for the first 5 years) will be laughing now. Compared to NAB for example, loans.com.au rate (as per that offer) would have given the borrower an additional 14 basis point saving, since June 2011.

cough ................

Its called cannibalising your own business.

Funny how FM needs to raise its rates ...........

Its probably good for FM that LOANS is only a small volume operation.........otherwise something would have to give somewhere.

1. Either we break our RBA link promise.......... I suspect its not contracted ??? rather an undertaking ( someone with a LOANS contract can tell me)
2. We take less and less margin, because as we can see from their press below........their funding is subject to the same pressures as banks :eek: ( really ??)
3. Do over your existing and new brand name borrowers for your online cannibal brother.

Interesting times ahead .


thanks

rolf



Important changes from FirstMac

Adjustment to variable interest rates
As a financial institution we understand the importance of maintaining interest rates for our borrowers, while balancing this with the changing global markets and costs of funding.
As a result, and in line with recent market shifts, FirstMac will adjust its variable interest rates as follows:
New Business
Effective 27 February 2012, variable interest rates for new business will increase by 0.13% pa.
Existing business
Effective 27 February 2012, variable interest rates for existing business will increase by 0.10% pa.
Existing portfolio repayment changes will be effective from 27 March 2012, and borrowers will be advised accordingly.
Updated product materials reflecting these changes will be accessible from the Brokers Online website.
 
That guy is based overseas and not to defend the banks but he is full of it. You only have to look at what they are paying for money presently and it is clear their funding costs have gone up. Paying more than they are lending at..
 
That guy is based overseas and not to defend the banks but he is full of it. You only have to look at what they are paying for money presently and it is clear their funding costs have gone up. Paying more than they are lending at..

I was thinking about this when I heard what the Société Générale guy had to say. Are these notes issues just smoke screens, a bit of money they are willing to pay over the odds for to help maintain a pretext?
 
Have a look at current term deposit rates and what lenders recently paid for their covered bonds. Token Funder has spoken at length about the covered bonds in another thread. With currencey hedge they paid more than loan rates. Look at online savings accounts and online loan providers.. deposits paying 6.00 and lending rates from 6.14...Look at small lenders who also raised their loan rates. Excessive discounting has also pretty much suddenly stopped from the vast majority of full service lenders.
 
Have a look at current term deposit rates and what lenders recently paid for their covered bonds. Token Funder has spoken at length about the covered bonds in another thread. With currencey hedge they paid more than loan rates. Look at online savings accounts and online loan providers.. deposits paying 6.00 and lending rates from 6.14...Look at small lenders who also raised their loan rates. Excessive discounting has also pretty much suddenly stopped from the vast majority of full service lenders.

Marty, the deposit rates of 6% are generally 3 to 4 month specials with the actual savings rates in the low 4s. Term deposits vary between 3 to 5.7%.
 
So what is your point exactly? Say average td rate is 5% (assuming there is fair bit chasing the specials) and most new loans written in the last 6 months were at around 6.5% that's pretty skinny margins. Less than normal for sure.
 
Ubank were doing 6 on call and 6.14 on Mortgages pre blip ( I think)

hardly a sensible sustainable thing I would have thought

ta
rolf

5.4% plus 0.6% monthly saver bonus for balances less than $200k.

Does that mean the average cost for the bank for this funding source is 6%? No.

Its the surprising lack of nuance and broad brush statements from the banks about funding costs and their acolytes which really pisses me off.
 
5.4% plus 0.6% monthly saver bonus for balances less than $200k.

Does that mean the average cost for the bank for this funding source is 6%? No.

Its the surprising lack of nuance and broad brush statements from the banks about funding costs and their acolytes which really pisses me off.[

I am not an acolyte of the banks if thats what you are implying you are very much mistaken. What I have seen is unsustainable discounting (for them to keep profits growing) over the last 12 months.
 
5.4% plus 0.6% monthly saver bonus for balances less than $200k.

Does that mean the average cost for the bank for this funding source is 6%? No.

Its the surprising lack of nuance and broad brush statements from the banks about funding costs and their acolytes which really pisses me off.[

I am not an acolyte of the banks if thats what you are implying you are very much mistaken. What I have seen is unsustainable discounting (for them to keep profits growing) over the last 12 months.

Marty, no, not referring to you. Just to the plethora of bank advocates who want to provide, imo, less than full disclosure on these issues. And when funding costs were reducing no, similar messaging and conditioning speeches from the banks saying the same.

I think in future, I'll just shout at the wall, get my frustrations out, and just get on with it. Bit like arguing with the umpires decision at the footy. Its not going to change anything :p
 
Marty, no, not referring to you. Just to the plethora of bank advocates who want to provide, imo, less than full disclosure on these issues. And when funding costs were reducing no, similar messaging and conditioning speeches from the banks saying the same.

I think in future, I'll just shout at the wall, get my frustrations out, and just get on with it. Bit like arguing with the umpires decision at the footy. Its not going to change anything :p

Hi Buzz,

The bit about funding pressures reducing and not being passed on is certainly true.

The thing about shouting at the wall...well if you saw some of my pointless tanties over the years you would know we are on the same team! Had one today in fact, re read email and deleted it, rewrote it deleted it again (quite a common occurance for me). Would love to unload but it IS counter productive.
 
The bit about funding pressures reducing and not being passed on is certainly true.
Of course it is. In the glory days pre-GFC the banks simply followed the Res B down. Did anyone here about "cost of funding" then? If you have any doubt that they were on a gravy train, check out their share prices.
 
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