"Banks do not have much more room to move interest rates downwards due to shortage of available loan capital resulting in tight margins. "
The elephant in the room for me is the fact that the banks have written 1 in 3 mortgages since 2008, many of which were the result of the government fiddling with the market to buy votes, many of which will need to be refinanced soon depending on maturity of bonds sold to overseas funding sources.
A small amount of this debt will be replaced by local bank deposits. The rest will need to be re-financed by much more expensive os funding.
I don't claim to know very much about the expected blowout in spreads, but the basic rule is for me, if you borrow a whole lot and stick it into a market that does not produce anything, resulting in an overinflated, overbought asset bubble, during a time when the rest of the world is going backwards, then the magic trick will eventually be revealed for what it is, just an illusion of wealth.
The maturity dates are of interest to me for these funds, does anyone know the average term? I have heard anything from 12 months to 5 years. Les?
