How do banks get their funding? #banks fund themselves through a range of sources, including deposits, wholesale debt and equity. The cost of this funding is key to determining the rates they offer on loans to households and businesses. Part of the bank’s current funding comes from the Term Funding Facility (TFF) announced by the Reserve Bank Board in March 2020 as part of a comprehensive policy package to support the Australian economy in response to the COVID-19 pandemic. Through the TFF, the banking sector borrowed $188 billion (around 8% of the banks’ total credit) on a three-year fixed rate of 0.25%. The TFF, along with reduced deposits and a challenging international market, have left banks facing a credit crunch, according to FINSTREET.AU's Darren L.. What does this mean for the rest of the lending market, the borrowers who are seeking loans, and the brokers who assist them? Find out below in my latest article for Australian Broker. #creditcrunch #mortgagebrokers #brokernews
Banks are facing a credit crunch, according to Darren L., chief strategy officer at FINSTREET.AU, and he believes there’s a window for non-banks and private lenders to take market share over the next 12 to 18 months. “Equally, it’s an opportunity for brokers to navigate the challenges of the credit crunch and provide valuable assistance to customers,” Liu said. As the risk appetite of banks becomes more stringent, Liu said its essential for the industry to evolve their thinking about non-banks and meet this opportunity. https://lnkd.in/eH2c9TfS #creditcrunch #banks #nonbank #finserv #mortgagebroking #bankfunding #brokers #brokernews
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11moGreat article Ryan Johnson … good to see this depth of insight into bank funding Darren L.