Crazy levels of competition in the mortgage market and moves to lure savers will only create further drag on banks’ profitability, as Commonwealth Bank and its dominant deposit book step up efforts to woo savers and offset funding pressures in the wholesale market.
Commonwealth Bank is expected to use its strong deposit book to lure in new savers over the coming year.“Mortgage refinancing and discounting have picked up, while deposit pricing benefits are moderating. This increases the likelihood that major bank margins peak earlier and at a lower level,” he said.
Mr Wiles said Commonwealth Bank was leading the market, increasing its bonus saver accounts by three times the Reserve Bank’s February policy tightening.“Following the RBA’s 25 basis points rate hike in early February, CBA lifted the rate on its Goal Saver account by 0.75 per cent to 4 per cent,” Mr Wiles said.
“In our view, [the deposit rate increases] likely reflects a renewed determination to maintain market share following its below system household deposit growth during the second half of 2022, and in the lead up to around $50 billion of TFF maturities,” Mr Wiles said.heavy discounting for new or refinanced home loans – which has resulted in the banks writing loans below their cost of capital