Phony war in mortgage market

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From Banking Day:

Lenders have resorted to talk of intense competition and deep rate cuts to create interest in a stagnant mortgage market where the cash rate has not moved for six months. However, a review of the data shows not much is actually going on.

Since the start of the year 26 lenders have changed their three-year fixed home loan rates, with the average change being a reduction of just two basis points, according to Infochoice. Of the 26 lenders, 11 actually put rates up.

Some banks have moved flexible rates too “but these moves were modest with an average reduction of six basis points”.

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The airlines and increasingly supermarkets too are embarked on shareholder-destructive capacity races and really need to take a leaf out of the bank’s oligopoly playbook.

Hold capacity down, control price. It’s not that hard!

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.