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Low interest rates – another headwind for the banks

 

In this week’s video insight Stuart identifies the impact low interest rates have on the banks. On the back of three successive 25 basis point cuts to the RBA’s official overnight rate, the major banks have reduced their standard variable mortgage rates by a cumulative 55 to 59 basis points over the same period. The problem is that as the RBA reduces the official rate, more and more of the banks transaction deposit base is paying zero or negligible rates of interest.

The Montgomery Private Fund owns shares in National Australia Bank. This post was prepared 15 October with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade National Australia Bank you should seek financial advice.

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