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Australian Investors Podcast

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The Negative Effects of the RBA on Mortgage Rates

Banks are still building portfolios like we're in a zero interest rate environment. The rates that they're getting on the mortgages that they offer in Australia now are no longer as ferociously competitive as they were. And their belief is that even though the RBA is an increasing interest rates, banks are still slowly increasing rates and reducing discounts. What that means is their interest margin is getting squashed because they've got a term deposit on a 5%, but their mortgage rates are only 6%. Whereas they're traditionally two or three percent. So they're really struggling to maintain that profitability which is pushing onto homeowners.

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