More fixed rate cuts to come: aggregators - The Adviser (22 February 2013)
The falling costs of funds will not encourage Australia's banks to cut their rates independently of the Reserve Bank, two industry stakeholders have claimed.
Speaking to The Adviser, Connective's Mark Haron said while the falling cost of funds will encourage lenders to sharpen the pricing on their fixed rate products, they will refrain from dropping their variable rates.
"I think Australia's banks will continue to move their variable rates in line with the RBA's movements," he said.
"That is not to say we won't continue to see lenders cutting their fixed rates. I think we will see plenty of this in the near term.
Mr Haron's comments were echoed by Vow Financial's Tim Brown, who added that he expects to see greater discounting from the banks.
"I think the drop in wholesale funding costs will encourage the lenders to sharpen their fixed rates and, in some instances, increases the discounts they offer on some of their packages," he told The Adviser.
Mr Brown went onto say that he expects the falling cost of funds to play into the hands of Australia's mortgage managers.
"The mortgage managers will have access to cheaper funds, which will help them compete with the other lenders in the market place," he said.
Mr Brown's and Mr Haron's comments come on the back of a recent straw poll by The Adviser which asked whether or not the majors will cut rates independently of the RBA this year.
According to the 226 respondents, 68.6 per cent believe the banks will continue to move "in cycle" with the RBA, while 22.6 per cent thought they would cut rates independently of the board and 8 per cent were unsure.