Banks tipped to hike interest rates again as RBA pressure mounts
After controversially lifting mortgage rates last year independently of official moves, the big banks are tipped to use the same playbook to offset earnings pressure that is showing no sign of letting up.
While the banks’ “repricing” of their mortgage books over the past 12 months provided a reprieve from adverse regulatory changes, their margins are under renewed pressure from rising wholesale funding costs and fierce competition.
Challenger banks, including AMP and Suncorp, this month cut mortgage rates up to 30 basis points for new borrowers to as low as 4.08 per cent, according to RateCity.
Other smaller lenders are offering home loans as cheap as 3.69 per cent.
Junior lender ME this week released a survey that found the proportion of Australians intending to buy a property fell by one percentage point to 17 per cent in the past six months, despite the cooling in prices in markets such as Sydney.
In a major outlook report on the big banks, Macquarie analyst Victor German said there were several emerging headwinds for margins, including lending competition for new customers and deteriorating funding costs.
He found that the nine-basis-point boost to margins from the banks’ earlier mortgage repricing would be whittled away to just three basis points this financial year.
“The margins outlook is the key issue for the sector in 2016,” Mr German told clients, noting that competitive tensions would build in a “low growth and low interest rate environment”.
“The key upside to margins is from further mortgage back-book repricing ... we expect banks to further reprice their mortgage books by 10-15 basis points.”
Mortgage repricing occurs when banks increase their rates independent of the Reserve Bank or do not pass the full amount of any official moves on to customers. Banks did both last year, holding back some of the RBA’s official 25-basis-point rate cuts and — more sensationally — lifting rates even though the official cash rate was not changed.
The cost of loans for property investors was also increased to comply with the regulator’s 10 per cent cap on lending to landlords.
The big banks blamed the rate rise late last year on the regulator’s decision to increase their capital requirements for mortgages, as recommended by the Murray financial system inquiry, to improve the competitiveness of small lenders hindered by more onerous “risk weighting” rules.
The regulatory decision spurred the big banks — Commonwealth Bank, Westpac, National Australia Bank and ANZ to raise almost $20 billion in equity from shareholders, reducing their returns.
In rare public comments since leaving Bank of Queensland in 2011, former chief David Liddy — who spent 33 years at Westpac — backed the efforts to improve competition. “The regionals have a definite role to play, just to keep the big guys honest,” he said, adding that they offered different business models and emphasised customer service.
Mr Liddy also backed the focus by regulators worldwide on increasing bank capital, which makes them safer by lowering their leverage. He said Australia’s banks were already strongly capitalised, so their challenges would be competition, operating in more global markets and controlling costs.
CBA, the nation’s biggest and most profitable lender, will provide the market with an update on competition, margins and costs next month at its interim result. Profit is tipped to rise 3 per cent to $4.77bn.
CLSA analyst Brian Johnson, who has urged CBA to slice its dividend ahead of looming additional regulatory pressures, agreed with Macquarie’s analysis that the earlier boost to margins was waning.
“We remain concerned that some of the August 2015-November 2015 back-book home loan repricing will have been consumed by rising wholesale funding costs, higher holdings of dilutive liquidity and the apparent migration of higher-rate investor home loans to lower-rate owner-occupied (loans),” Mr Johnson said.
Since increasing the price of loans for investors, the big banks have reclassified more than $50bn worth of loans as customers switch to owner-occupier status.
Following recent bullish data on the jobs market, the chances of the RBA cutting the cash rate have diminished, economists say.
If there are no RBA cuts, the banks would have to again announce unpopular and politically damaging out-of-cycle rate hikes to reprice their mortgage books. Notably, Macquarie’s Mr German has not factored more mortgage repricing into his forecasts.
评论
融资成本在提高吧。
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那谁谁，多买几套压压惊吧
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大家赶快去买房压惊，最后会不会越买越惊！
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感觉只会降， 不会升
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News today said 100% rate cut in August.
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