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Banks are losing money on mortgages

08/02/2012

Mortgage profitability in Australia is at its lowest rate in more than four years, according to a report by UBS Securities because of higher funding costs.

“Simply, the marginal cost exceeds the marginal revenue,” the report said. Unless banks reprice mortgages or funding markets significantly improve, there is no direct economic incentive for the banks to continue to write new housing loans said UBS.

“We see this as a dangerous situation for both the banks and the broader Australian economy,” the report said.

Source: The Adviser



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