Banks raising interest rates create opportunity for smaller lenders
As most of you are aware, there are some banks that are in the process of increasing rates for mortgages. This is inline with the changes handed down by APRA. Some people are quite concerned about this and have raised a lot of chat in the media about it. I see that it will create an opportunity for those smaller lenders that have been blocked out of the market ever since the GFC. So while the door may shut for some lending with the major banks, due to their exposure and asset backing, it will open the door for smaller lenders. They will have to comply with the same APRA regulations but won’t need to raise rates to do so.
The other side effect of this is that it may dent the confidence of small business and individuals and therefore require the Reserve Bank of Australia to lower interest rates further. Seems a bit crazy that the banks will raise them and the reserve bank lower them and put us back where we were but in reality the margins for the larger banks will increase.
So even though there may be some doom and gloom out there I think this may open the door for small business and lenders to grab some market share.