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Banks face muted home loan demand

by Staff Reporter7 minute read
The Adviser

Making headlines today, The Australian Financial Review has reported that Australia’s big banks are forecasting muted demand for home and business loans over the next six months.

According to the Australian Bureau of Statistics, demand for home loans increased by just 0.5 per cent last month, suggesting home buyer demand is waning.

As well as limp loan growth, bankers are concerned about pressure on interest margins, which are a key gauge of profitability.

Margins are being squeezed because banks are being forced to pay higher interest on savings accounts.

In addition, the cost of funds is ever increasing.

UBS analyst Jonathan Mott told the paper that home loan lenders would be forced to lift mortgage rates above the RBA if funding costs continue to grow.

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