>'When mortgage holders pay extra monthly payments due to increased interest rates, then where does that money go?. Not to the banks themselves I would thinks as their share prices are dropping.'
any benefit of extra revenue from higher loan rates is offset by the increased likelihood of more mortgage defaults in and environment when property is going down thus is someone brought a 2m home can afford to pay and the bank has to sell you house and only gets 1.5m they have to wear that cost to the most part
Prior to the last 6 months if someone defaulted there was a reasonable chance the sale of the property would recoup any losses due to prices of housing increasing thus the 'risk' the banks took was very low.... that is 'no longer' the case
in addition the banks have to pay more out in term deposits
the rise of the low cost no thrills loans have also taken large chunks out of the banks margins
add into that the rising cost of 'staff' i read and article recently one of the big four banks staff are thinking about striking due to 'only' being offered a 5% pay rise.....
just so many reasons to be bearish and 'no real' reason to be bullish
The big four to me are a Strong Sell (not financial advice just my opinion)
