Mortgage profit at all-time high as out-of-cycle cuts now 'inevitable'

by Adam Smith26 Feb 2013
"If the global economy continues to improve, funding markets keep rallying and deposit competition continues to ease we believe banks will come under pressure to initiate out-ofcycle rate cuts. This is likely to be exacerbated by the political environment," he said.
Should banks fail to move out-of-cycle to cut rates in the wake of easing funding pressures, Mott said they could risk "political interference".
As funding pressures ease, Mott has also predicted the Australian mortgage market could see an expanding group of players.
"We believe if debt markets continue to rally opportunities will open up for new
entrants to come back into the mortgage market," Mott said.
Mott pointed to YBR's recent origination agreement with Macquarie, and said improving market conditions could see new non-bank lenders enter the market. But Mott claimed more sustainable funding arrangements would be crucial to any new non-ADIs.
"We believe that market participants and regulators will have learned from the experiences of Rams, Northern Rock and other player heavily reliant on wholesale funding & RMBS during the financial crisis," he said.

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