Bouris wins support for cost of funds 'watch'
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BN
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26/10/2009 9:50:00 AM
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A recommendation from Mark Bouris that Australia establish a industry benchmark to track the cost of banks' wholesale funding has been backed the CEO of NAB.
The Australian reported that Cameron Clyne sees "great merit" in the establishment of an independent barometer.
The regular publication of a benchmark cost-of-funds rate would better inform the debate surrounding the movements in variable mortgage rates and the official cash rate, according to comments the paper attributed to Clyne.
Bouris proposed 'bankwatch' as a means for consumers to predict interest rate movements outside of official monetary policy.
"We should have a benchmark rate for the cost of wholesale funds. That way, if the benchmark rate is 7%, for example, and my variable rate is 6.5%, then I should start thinking about fixing, because I could soon be paying 9% if you allow a 2% margin over costs," he said.
Related stories:
Bouris calls for 'bankwatch' - With banks justifying rate increases beyond those led by the RBA due to the cost of wholesale funding, Yellow Brick Road chairman Mark Bouris has called for the establishment of an industry benchmark to track these costs.
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BBB on
26 Oct 2009 01:16 PM
If this is ever to happen it will bring transparency to the costing models and truth to what it costs to deal with a broker or intermediaries.
I cannot see the banks to ever agreeing to this unless they are forced to do it by legistation.
Good idea but... on
26 Oct 2009 04:55 PM
The devil is in the detail of such proposals. While well intended, the proposal may be unworkable as lenders may have trouble "dumbing down" their cost of funding to a single number (or set of numbers) that brokers could understand, let alone most consumers.