tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Thursday, August 13th, 9:40PM

Mortgages

rss
Latest Headlines

Bank margins under pressure: KPMG

Bank margins are under pressure amid record low interest rates and lenders may not be able to cut mortgage rates much further, according to a new report from KPMG.

Wednesday, April 1st 2020, 10:31AM

KPMG's Financial Institutions Performance Survey (FIPS) suggests there is "increasing pressure" on margins as the official cash rate falls close to zero, at 0.25%. 

The report says deposit funding "has limits which are required to keep the flow of funds, meaning that banks will only be able to reduce the deposit rates up to a certain point".

Speaking to TMM Online, KPMG's John Kensington said the downward pressure on interest rates would make it difficult for banks to drop mortgage rates much further.

"They borrow at a rate, and they need to make a certain margin to cover operating costs. The cost of borrowing, plus the margin, will define where the cost of lending goes. If rates have already been re-pegged since the reduction in the OCR, it's probably as far as they can go down, unless there is a further reduction in global interest rates, which causes their own borrowing costs to go down."

KPMG's FIPS report for the three months to December revealed New Zealand bank profit dropped 6.86% compared to the same period in 2018. Banks made $1.12 billion in the quarter. 

"While this drop in profit was a reflection of impacts on the New Zealand economy from then-current domestic and international events, subsequently we have observed the previously unforeseen impact from Covid-19 have far more immediate and potentially prolonged and significant consequences," Kensington said. 

The report covered the quarter before the Covid-19 outbreak, but Kensington believes banks will face "significant" and "wide-ranging" economic implications". He does not expect credit to dry up for mortgage borrowers, however. 

"The Reserve Bank has been fairly clear. It will support the banks as much as it can in return for them supporting their customers. If banks don't support customers at this time, people won't want to be their customers. They seem to be doing the right thing." 

 

Tags: banks interest rates KPMG Lending Mortgage Rates mortgages

« Mentoring role for NZFSG's PattenBanks launch SME support loans »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • It starts with governance
    “Thanks JP, if we know what the rules are we can follow them, if we know what the solutions are we can implement them....”
    13 hours ago by Adviser1
  • Record gold prices 'could go higher'
    “Happy to be made wiser by Gold aficionados, but this years Gold rally seems one of the unexpected and possibly irrational...”
    14 hours ago by Davidvs
  • It starts with governance
    “Hi JP, good analogy of what would be a sensible way to approach the new landscape for March 2021. Governance does not have...”
    17 hours ago by gavin austin adviser business compliance
  • It starts with governance
    “@Adviser1 this is part of the discussion we need to have as an industry. It is also part of the message we have with the...”
    1 day ago by JPHale
  • It starts with governance
    “Thanks Gavin, appreciate your comments. So by engaging a compliance consultant and having the necessary policies, procedures...”
    2 days ago by Adviser1
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 ▼3.85 ▼3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 ▼2.93 ▼3.07 ▼3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.45 2.99 3.35
SBS Bank 4.54 ▼3.05 3.19 ▼3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - ▼2.55 2.69 ▼2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 ▼2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 ▼3.29
TSB Bank 5.34 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 3.65 3.69 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.05 3.13 3.12

Last updated: 11 August 2020 8:24am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com