Banks competing less on interest rates for mortgage lending
Banks competing less on interest rates for mortgage lending, KPMG says
Oct. 3 (BusinessDesk) – Banks are improving the margins on their lending by competing less on cut-throat interest rates and instead are increasingly using giveaway offers for iPads, televisions and smartphones, says the quarterly KPMG Financial Institutions Survey.
“Fixed lending rates have started to increase over the past quarter, from low levels which were driven due to intense competition over the past quarter, which has contribute to the interest rate margin increase” the survey findings say.
“This intense competition in household lending appears to have begun to soften in respect of the rates offered, with other factors of competition being used, such as banks contributing to legal fees and offering consumer electronics,” it said.
“Couple with the new lending restrictions on high loan to value ratio loans, this would indicate further increases in lending interest rates being offered to the market in the near future,” it said.
Banks’ average interest margins are measured in tenths of a percentage point, and increased 0.2 percent to an average 2.26 percent in the three months ended June 30, compared to the previous three months, when a 0.2 percent decline was recorded.
The nine banks covered by the survey earned a total net profit after tax for the June quarter of $1.023 billion, up 5.4 percent on the previous quarter, “largely driven by an increase in non-interest income, whilst being slightly offset by increased operating expenses.”
ASB and Kiwibank recorded the largest operating cost increases, thought to reflect investment in new technology.
Total assets among the banks surveyed increased by $8.8 billion, or 2.37 percent, over the quarter, mainly thanks to increases in gross loans and advances and financial assets at fair value, said KPMG.