Two years ago, the interest rates charged by the major banks on new variable-rate housing loans were about 190 basis points above their cost of funds. The margin today is slightly narrower. To the extent that there has been a widening in banks’ margins it has been on their business lending.
So far, it appears that there is still sufficient competition in the housing loan market for lenders not to have been able to widen their margins. The Government has helped to sustain that competition by putting in place arrangements to encourage the continued securitisation of housing loans.