A major French bank has discounted the claims made by our big four banks that their cost of funding for home loans is increasing.
The major banks have reported that their cost of funding has been progressively increasing to a point that unless they up the interest rates on home loans they will find themselves in a losing position. In response to these claims, Societe Generale Asia Pacific head of interest rate strategy Christian Carrillo has called the bank allegation “almost mathematically impossible”.
According to Fairfax, Carrillo dismissed the majors’ claim in a recent research note.
“The claim that the recent increase in mortgage rates is due to higher funding costs is very dubious. It appears that the banks are foremost looking to protect their already high margins on home loans.
Carrillo instead argued that nearly all sources of funding for Australian banks are less expensive that their post-GFC highs and have contunued to fall in absolute terms since the second half of 2011.
Australian Bankers’ Association CEO Steve Munchenberg dismissed Carrillo’s research, saying it lacked specific bank funding models.