It’s 20 years since the bank, which is Australia’s largest lender, has experienced this kind of market share retreat and the pressure is on CEO Matt Comyn to respond and avoid a fourth month of decline.How fiercely he does this will set the tone for all lenders, and could send the industry back to the discounting wars of the early part of the year.
The trigger for the home loans wars was the enormous refinancing event that has been in full swing this year as. The big four banks were desperate to retain customers and were offering rates so competitive that many loans were unprofitable. Macquarie’s successful push to increase its share of the market was also a significant factor pushing other banks to sharpen their pricing pencils.
While troubled loans have increased slightly since the Reserve Bank began lifting rates last year, it has not been the catastrophic event many were predicting.As the largest and most profitable bank, CBA was arguably under less pressure to discount as heavily as others such as Westpac and ANZ, which had suffered market share losses in the preceding couple of years and were playing catch-up.
But the main game is loans to owner occupiers and a reduction in this rate is what the market is waiting for. Banking analysts will be eagerly looking for commentary on this when the CBA releases its quarterly update in mid-November.AFR Meanwhile, rising house prices have provided the banks with a bit more flexibility on lending because as home values rise so does the homeowner’s equity component, which in turn improves the loan-to-value ratio.CBA’s head of Australian economics, Gareth Aird, said on Wednesday that, “we expect a 25-basis-point rate increase at the November RBA board meeting, which would take the cash rate to 4.35 per cent”.
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Source: FinancialReview - 🏆 2. / 90 Read more »