Pete Wargent blogspot
Co-founder & CEO of AllenWargent property advisory & buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.
4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.
"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.
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"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.
"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.
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Monday, 7 November 2016
Funding costs keep falling
Funding costs fall again
Australia's banks are mostly funded by domestic deposit these days, at nearly 60 per cent of their funding composition.
Equity accounts for a fair share of the remainder too.
But what about their debt funding costs?
Last week's Statement on Monetary Policy took a short look at this.
And the answer is that debt funding costs have kept on falling in 2016.
And what's more they will continue to do so in the near future.
After cuts to the cash rate May and August, the major banks’ debt funding costs also declined.
The cost of short-term debt is now under 2 per cent (down from well above 6 per cent in 2007).
Meanwhile, the marginal cost of long-term debt is a bit above 3 per cent.
It is true that since the beginning of the year, these costs have declined by a little less than the cash rate.
This was mainly because of changes to term deposit rates.
But overall the difference was not material.
And now funding costs are expected to fall further, since the cost of new wholesale debt remains below the cost of outstanding debt.