Term deposit interest rates are tumbling, by 35 basis points in some cases, Plenty of big bank offers reduced in recent days by at least 25 basis points, with the major banks setting the tone and close followers abiding by the rules of the game.
“A reduction in interest rates bears on margins and will be a problem for some, you mentioned credit unions,” Mark Williams, acting CEO of Newcastle Permanent Building Society told Banking Day yesterday.
“At Newcastle Permanent, we have capital north of 20 per cent and we can compete with the big banks.
“A rate cut is good news for mortgage borrowers but not so good news for those of us who are savers,” Williams said.
Estimates are flowing on the profit knock from the rate cut.
Goldman Sachs yesterday projected “a 4 per cent earnings downgrades for the sector”, meaning the Big Four banks.