A researcher has claimed mortgages are more profitable than ever, and predicts out-of-cycle cuts are "inevitable".
In a note to investors, UBS analyst John Mott has claimed that, while Australian banks were losing money on mortgages just 12 months ago, profits have turned around to represent record returns.
"Over the last twelve months a rapid reduction in credit spreads and mortgage repricing implies that writing a new wholesale funded home loan has never been more profitable," Mott said.
The UBS report has estimated that banks are generating around 88bps of profit on a new mortgage. As a result, Mott predicted banks would be forced to make out-of cycle cuts.