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CBA's Norris sees more 'rational pricing' soon in NZ mortgage market
Commonwealth Bank of Australia CEO Ralph Norris told analysts at CBA's results briefing yesterday that ASB's mortgage margin had tightened in a competitive market influenced by an aggressive Kiwibank, but that the market would return to some type of 'rationality' over time.
"There's no doubt in New Zealand there's been significantly greater (competitive) pressure in relation to mortgages," Norris said, referring to Kiwibank's aggressive activity in the market. He had been asked about the slide in net interest margins in New Zealand.
"I would suspect that going forward I don't think we'll see a continuation of that sort of decline," Norris said, citing the amount of lending New Zealand still had to do on more expensive international markets to finance its current account deficit.
"There will be a more rational approach to pricing over time in that market and I hope it's sooner rather than later," he said.
* This article was first published yesterday in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.
With the stroke of a
With the stroke of a pen Norris got his wish .It seemed that his comments were a code for ASB to put up their rates today ,and they did .Check it out.
Norris knows that Kiwibank competition
Norris knows that Kiwibank competition will no longer be used to keep the foreign banker racketeers from rorting us now that the racketeers have one of their favourite sons in the Prime Ministers cheer.
The exclusive membership central banking club and their subsidiary majority stake holder internal trading banks are closed loop monopoly of issuance of created credit. NZ is currently the only nation in the world with a true national bank in Kiwibank. It is mainly funded from internal deposits and is the only reason what so ever that the banks have not given the OCR the big finger like they have in most other nations, keeping rates higher, claiming increased borrowing costs in a tight credit market.
True. I was talking with
True. I was talking with few friends overseas recently, and was very suprised to hear interest rates are actually going up!
Some interesting undercurrents going on
Some interesting undercurrents going on here. To consider:
a) Kiwibank were not only aggressive in cutting mortgage rates - they were VERY aggressive in cutting term deposit rates. This followed a period when they were previously offering some very good rates for depositors, (about 9-12 months ago), during which they no doubt pulled in lots of cash which funded their recent largesse to mortgage borrowers (recollect that most of Kiwibanks lending is funded by onshore funds).
b) However they now must have a problem - those term deposits are now maturing and savers must be looking with some disgust at what Kiwibank now has to offer.
c) Along come bond offers such as Fonterra's, which scoops up $800m of what could have been money placed on deposit with banks such as Kiwibank (which they could then have re-loaned on the mortage market), but which is now out of their grasp.
Result - Kiwibank is now running out of ammunition (they may respond by thinking rather more of their neglected depositors, then again they may not), and their Australian competitors are now able to widen margins (as ASB has done), as the pressure comes off. In effect the RBNZ may no longer be able to use Kiwibank as its battering ram on lower mortage rates, particularly as the increasing flood of corporate bond issues sucks depositors money away from the banks. Result - ASB increases rates. Question - will the RBNZ rate cuts now starting to lose traction?
One series of possible interpretations...........
Andy, You are right on
Andy,
You are right on the money.
Kiwibank is likely to run out of ammunition and may also want to reduce its loan acquisition rate because it is having problems coping with all the volumes. Service levels are not what Kiwibank would like them to be.
Longer fixed mortgage rates will be rising again soon. I've commented a bit more on this at the bottom of this story in a 'What I think'.
http://www.interest.co.nz/ratesblog/index.php/2009/02/15/record-improvem...
cheers
Bernard